TWD: USD/TWD Lower, Still Eyeing 30.00 Test
Spot USD/TWD is a little lower in the first part of Wednesday dealings, last near 30.10/25. This is still up from recent lows, while earlier in May we had a sharp dip sub 30.00, which will remain a downside focus point for bears in the pair. Recent moves back above 30.20 have drawn selling interest, while mid May highs were at 30.46.
- Much like USD/KRW, focus in USD/TWD remains on downside risks associated with increased hedging of offshore investments and/or repatriation flows.
- Interestingly Reuters reported yesterday that the central bank (CBC) had asked some exporters to reduce USD selling to curb TWD appreciation pressures. This may reflect concerns over further losses for lifers, particularly if we re-test sub 30.00. Elsewhere it was reported by the Financial Supervisory Commission that as at end March that 90% of the lifers NT$23.3trln in offshore assets was denominated in the USD, with 61.5% hedged (via BBG, see this link).
- The cross asset backdrop remains positive from an equity market standpoint, with the Taiex up +0.65% so far today. We are still short of recent highs for the index. Offshore investor inflows were positive yesterday, but still negative week to date. Some slowing has been evident given elevated May to date inflows of over $7bn.
- Late yesterday, April export orders rose 19.8%y/y, well above the 9.5% consensus. Export orders to the US were up 30.3%y/y, amid firm tech related demand.
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ASIA STOCKS: Outflows Continue to Challenge Asian Bourses
The ongoing theme of outflows dominate Asia markets again as any inflows are short lived.
- South Korea: Recorded outflows of -$88m as of 18th, bringing the 5-day total to -$1,001m. 2025 to date flows are -$12,479, m. The 5-day average is -$200m, the 20-day average is -$431m and the 100-day average of -$156m.
- Taiwan: Had outflows of -$552m as of 18th, with total outflows of -$2,292m over the past 5 days. YTD flows are negative at -$20,009. The 5-day average is -$458m, the 20-day average of -$240m and the 100-day average of -$233m.
- India: Had inflows of +$470m as of the 17th, with total outflows of -$72m over the past 5 days. YTD flows are negative -$15,486m. The 5-day average is -$14m, the 20-day average of +$17m and the 100-day average of -$142m.
- Indonesia: Had outflows of -$487m as of 17th, with total outflows of -$1,273m over the prior five days. YTD flows are negative -$3,440m. The 5-day average is -$255m, the 20-day average -$100m and the 100-day average -$47m
- Thailand: Recorded outflows of -$40m as of the 18th, outflows totaling -$33m over the past 5 days. YTD flows are negative at -$1,422m. The 5-day average is -$7m, the 20-day average of -$25m the 100-day average of -$19m.
- Malaysia: Recorded inflows of +$9m as of the 18th, totaling -$75m over the past 5 days. YTD flows are negative at -$2,853m. The 5-day average is -$15m, the 20-day average of -$50m the 100-day average of -$40m.
- Philippines: Saw inflows of +$0m as of 17th, with net inflows of +$5m over the past 5 days. YTD flows are negative at -$287m. The 5-day average is +$1m, the 20-day average of -$4m the 100-day average of -$5m.
CHINA PRESS: Targeted Measures To Stabilise Foreign Trade Necessary
Authorities should consider subsidising logistics costs for industries with export dependence exceeding 30%, such as tax deductions for overseas warehouse construction used for cross-border e-commerce, said Zhu Keli, founding dean at the National Research Institute of New Economy. The State Council executive meeting last Friday called for customised targeted measures to stabilise employment and foreign trade in different industries and enterprises.
CHINA PRESS: China Needs To Boost Funding Support For Consumption
Officials could offset tariff disruption and declining external demand by implementing between CNY700 billion to CNY1 trillion of fiscal funds to promote domestic consumption, possibly issuing more special treasuries as early as Q2, said Wang Qing, analyst at Golden Credit Rating. The CNY300 billion consumer goods trade-in scheme should be expanded to include more goods and services, and increased funding, in response to growing momentum in redirecting export-oriented production toward domestic markets beginning in Q2. (Source: Securities Times)
