Taiwan records highest ever net fund outflow in Q3

Taiwan recorded the highest-ever net fund outflow in the third quarter of this year, marking the 45th consecutive quarter of a net fund outflow, according to the central bank.

Data compiled by the central bank showed net fund outflows in Taiwan's financial account, which measures the flow of direct investment and portfolio investment, totaled US$27.10 billion in the July-September period, up from US$18.36 billion a year earlier.

The third quarter figure also rose US$1.38 billion from a quarter earlier.

The central bank said the increase in net fund outflows came after residents' portfolio investments abroad posted a net increase of US$14.74 billion, as insurance companies raised their investment in debt securities overseas.

In addition, nonresidents' portfolio investments recorded a net fall of US$7.95 billion mainly due to a reduction in local stock holdings by foreign investors, the central bank said.

Over the past 45 quarters, accumulated net fund outflows hit US$594.01 billion or NT$16.55 trillion, which is equivalent to seven-years of total tax revenue for Taiwan.

Addressing concerns that investors will keep moving funds out of the country and into U.S. dollar-denominated assets, the central bank said net financial account outflows were common among countries like Taiwan that have a long-term current account surplus.

Other countries, including Japan, Singapore, South Korea, Germany and Thailand, which have all enjoyed a long-term current account surplus, have also tended to record net financial account outflows, the central bank said.

The current account mainly measures exports and imports of a country's merchandise and services.

In the third quarter, Taiwan recorded a current account surplus of US$26.10 billion, down US$3.47 billion from a year earlier, the central bank said.

The central bank said the decline did not represent a weakening export performance, but rather was a result of an increase in Taiwan's imports.

According to the Ministry of Finance, Taiwan's imports of semiconductor equipment reached US$9.2 billion in the third quarter, up US$3.7 billion from a year earlier.

They added that the increase showed many semiconductor suppliers in Taiwan were willing to invest in expanding production driven by expectations of strong global demand.

In the first nine months of this year, Taiwan's current account surplus hit a new high of US$81.02 billion as the country generated high outbound sales in items including electronics components and machinery, the central bank said.

Source: Focus Taiwan News Channel