US currency and equities experience growth, buoyed by optimistic sentiment surrounding potential US-China trade negotiations.
Sparking Growth: A Lively Picture of Taiwan's Financial Markets
The New Taiwan dollar and Taiwanese stocks have seen a remarkable surge, with signs indicating a potential easing of trade tensions between the world's economic powerhouses and a strong performance from US tech earnings boosting the outlook for Taiwan’s semiconductor exports.
Timing remains unspecified, but the recent happenings in Taiwan's financial landscape offer insights into potential catalysts for stability and growth. Here's a brief recap:
Government Interventions- Stabilization Fund Readiness: Taiwan's National Stabilization Fund, equipped to combat market volatility, has been prepared to arrange special meetings as demonstrated by its NT$54.51 billion intervention in 2022-2023, aid the Taiex in rising over 10% amid U.S. Fed rate hikes.- Support Packages: The Cabinet's allocation of funds to shield sectors such as electronics, steel, and other industries from U.S. tariff impacts bolsters investor confidence in export-reliant industries.
Geopolitical and Economic Strategies- "Zero Tariffs" Negotiations: Taiwan's President Lai Ching-te aims to negotiate a USMCA-style trade agreement with the U.S., reducing tariff barriers for Taiwanese exporters.- Expanded U.S. Investments: Increased commitments to U.S. market investments may strengthen bilateral trade ties and minimize supply chain risks.
Market SentimentAnalysts observe that recent low turnover (NT$147.3 billion on April 7, 2025) suggests conservative trading, but the government maintains that market fundamentals remain robust. They anticipate a return to stability primarily driven by the tech sector's resilience, such as TSMC's growth forecasts. Historical precedents, like the 2022-2023 intervention, indicate that such measures can generate rebounds in the face of external shocks.
The NT dollar has gained nearly 6% against the greenback this year, propelling it to the forefront of emerging Asian currency rankings. This surge is backed by significant volumes in greenback-NT dollar non-deliverable forwards, making a rare appearance on the top of global trading charts. Additionally, China expressed its intent to assess possible trade talks with the U.S., further boosting the nation's currency and shares. The rise in the NT dollar also saw the TAIEX jump 2.73%, outperforming the region's equity gauges.
China's outlook for global trade improved, providing a significant boost to Taiwan's currency and shares. The improved trade outlook, coupled with strong US tech earnings, notably from Microsoft Corp and Meta Platforms Inc, have driven the Taiwanese stock market. Analysts indicate that Microsoft and Meta's better-than-expected capital expenditures suggest the demand for AI remains strong, which will positively affect overall chip demand and Taiwan Semiconductor Manufacturing Co's revenue. Furthermore, analysts expect expectations for softness in the US economy to weigh on the greenback and benefit the NT dollar.
The CNA provided the original report.
- The intraday performance of the New Taiwan dollar and Taiwanese stocks indicates strong prospects for Taiwan's financial markets, with the NT dollar rising nearly 6% against the US dollar this year, making it one of the top emerging Asian currencies.
- The robust market fundamentals, despite conservative trading, are predicted to lead to a return to stability, primarily driven by the tech sector's resilience, such as TSMC's growth forecasts.
- Government interventions, like Taiwan's National Stabilization Fund's NT$54.51 billion intervention in 2022-2023, and support packages for industries such as electronics, steel, and others, bolster investor confidence in export-reliant industries.
- Geopolitical strategies, such as Taiwan's President Lai Ching-te's aim to negotiate a USMCA-style trade agreement with the US and increased US market investments, may strengthen bilateral trade ties and minimize supply chain risks, offering potential catalysts for stability and growth in Taiwan's finance and business industries.
