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Taiwan records net fund outflow for 34th straight quarter

2019/02/23 17:07:43

Taipei, Feb. 23 (CNA) More funds for investment were remitted out of Taiwan than flowed into the country in the fourth quarter of 2018 for the 34th consecutive quarter, the longest run in the country's history, according to Taiwan's central bank.

The net fund outflow in Taiwan's financial account, which measures the flow of direct investment and portfolio investments, was US$17.88 billion during the quarter, bringing the aggregate net outflow for the 34 quarters to US$413.31 billion, central bank data showed.

The fourth quarter figure was more than double the net outflow of US$7.83 billion in the third quarter as foreign investors cut their holdings in local securities amid volatility in global financial markets, the central bank said.

For 2018 as a whole, Taiwan recorded a net fund outflow of US$51.92 billion in its financial account, the central bank said.

In the October-December period, foreign institutional investors registered a fund outflow of US$11.9 billion as the weighted index on the Taiwan Stock Exchange fell 1,275.93 points, or 11.62 percent, amid trade tensions between the United States and China.

Net securities assets held by Taiwan residents overseas rose by US$13.10 billion from a year earlier, largely because of large investments made by life insurance companies to purchase foreign bonds, the central bank said.

That increase came as non-Taiwan residents in Taiwan saw a NT$3.11 billion fall in their net securities assets due to their reduction in local equity holdings, the central bank added.

Meanwhile, net direct investments made by Taiwan residents overseas were up by US$7.35 billion from a year earlier in the fourth quarter, while net direct investments made by non-Taiwan residents in the local market were also up US$1.51 billion, the data showed.

The continued outflow fueled mounting concerns that investors will keep moving funds out of the country and into U.S. dollar-denominated assets.

The central bank dismissed the concerns, however, saying that Taiwan is one of the few countries in the world to record a long-term current account surplus, and countries with such surpluses tend to register net financial account outflows.

Other countries following a similar pattern include Japan, Singapore, South Korea, Germany and Russia, the central bank said.

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

In the fourth quarter, Taiwan's current account surplus totaled US$18.65 billion, down US$6.99 billion, or 27.3 percent, from a year earlier, in the wake of a decline in the country's exports at a time of weakening global demand, the central bank said.

Taiwan's merchandise trade surplus fell US$5.45 billion from a year earlier to US$17.47 billion in the fourth quarter, while its service deficit in the fourth quarter was US$780 million, down from a deficit of US$1.51 billion in the fourth quarter of 2017.

In 2018, Taiwan recorded a current account surplus of US$68.26 billion, the central bank said.

(By Pan Tzu-yu and Frances Huang)