The TAIEX last week climbed to record highs for five consecutive sessions as foreign funds snapped up local shares amid signs that the US Federal Reserve would cut interest rates this week. Market sentiment was further buoyed by the annual Semicon Taiwan trade show, which helped fuel positive outlooks for the chip sector, with Taiwan Semiconductor Manufacturing Co (TSMC) extending its record-setting streak and several electronics heavyweights, such as Delta Electronics Inc, also reaching historic highs.
The latest US data showed that weekly jobless claims for the week ending on Sept. 6 spiked to 263,000, the most since October 2021. Meanwhile, consumer confidence this month dropped to 55.4 on a 100-point scale, the lowest since May, while the consumer price index rose 0.4 percent monthly versus the expected 0.3 percent. Annual inflation reached 2.9 percent, right on target, while core inflation held steady at 3.1 percent annually. All of that boosted investor confidence that the Fed would have a clear rationale to begin a rate-cutting cycle this month, as concerns about an economic slowdown began to outweigh those over inflation.
Bright expectations for the semiconductor industry also fueled the stock rally. Advanced processes and packaging were in the spotlight at Semicon, with observers saying that long-term trends in artificial intelligence (AI) and high-performance computing would continue to support leaders such as TSMC and their supply chain partners. As a result, foreign institutional investors recorded nine consecutive sessions of net buying, totaling NT$214.8 billion (US$7.12 billion) as of Friday, playing a major role in driving the rally, Taiwan Stock Exchange data showed.
Meanwhile, Taiwan’s record exports and strong GDP growth forecast further buoyed growth and tech stocks. Exports surged to US$58.49 billion last month, a 34.1 percent year-on-year increase that beat Bloomberg’s market forecast of 25 percent, driven by strong semiconductor and electronic component sales amid the AI boom, the Ministry of Finance reported on Tuesday last week. On Aug. 15, the Directorate-General of Budget, Accounting and Statistics raised its full-year GDP growth forecast to 4.45 percent from 3.1 percent, following an 8.01 percent year-on-year expansion in the second quarter.
However, the agency’s latest wage data reflected some hidden worries about tariffs, living expenses and job security for traditional industries. From January to July, the average monthly wage for the nation’s industrial and service sectors came in at NT$47,651, up 2.98 percent from the same period last year, the strongest growth in three years, it reported on Friday. The median monthly wage over the period, considered a more accurate measure of typical earnings, as it is not skewed by extremely high or low wages, increased 2.78 percent to NT$38,170, indicating that many workers earned less than the average.
Taiwan’s electronic components (including semiconductors) and information and communications technology products account for more than 70 percent of Taiwan’s exports, but producers of those goods employ less than 10 percent of the nation’s total workforce, with a majority of those workers in the traditional and domestic demand-focused industries, a survey by online job bank yes123 showed.
Amid worries about tariffs, most employers were conservative about their business outlook, and only 16 percent of workers received a pay raise in the first three quarters of this year, the survey showed.
The Executive Yuan last week approved a NT$550 billion special budget, including NT$236 billion earmarked for NT$10,000 cash handouts per person. While the measure could boost retailers and other consumer-focused businesses ahead of the holiday season, its broader economic impact would hinge on whether households spend the money on necessities they would have purchased anyway or on additional services, products and big-ticket items.
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