HALISTER1: INSIDE TAIWAN: TWD Rallies to More Than 1-Yr High on Stock Boom

INSIDE TAIWAN: TWD Rallies to More Than 1-Yr High on Stock Boom

(Bloomberg) -- TWD advances to strongest since July 2015 as equity market continues to attract inflows.
  • TWD closed up 0.7% up at 31.225 vs USD; earlier hit 31.178, strongest since July 22, 2015; volume rises 72% to $1.1b, highest in 4 weeks
    • Foreign investors buy local stocks for fifth day, net purchasing TWD6.9b ($222m); Taiex Index gains 0.5% to 9200.42, highest since July 8, 2015
    • Overseas inflows into Taiwan equities +$1.3b so far in Aug., taking year’s inflows to $13b, most among nine Asian markets tracked by Bloomberg
  • Recent strength of TWD is flow-driven as easy money flocks to local stock market to ride tech sector gains, Barclays EM Asia economist Angela Hsieh says
    • Central bank has been more tolerant of stronger TWD since April; life insurers have raised hedging ratio for overseas allocations
    • USD/TWD may test 31 psychological level near-term; likely to see support and profit-taking around that level
  • Foreign investors continue to sell USD, while local importers are buying at 31.200 per dollar, two traders say
    • Some exporters sell USD after USD/TWD breaks below 31.250, one of the traders says
  • Yield of 0.75% govt bond due March 2026 declines 2 bps to 0.6830%
  • Abundant liquidity is positive for bond market as money has few places to go; global mkt sentiment also improves; 10-yr govt yield to stay below 0.7%, KGI Securities bond trader Star Lai says
  • CBC sells TWD30b 2-yr note at 0.405%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Angela Hsieh (Barclays PLC)
Star Lai (KGI Securities Co Ltd)

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