Global financial rallies boost labor funds' year-to-date returns

Taipei, April 1 (CNA) The booming financial markets pushed up the gains of labor funds managed by Taiwan's government Bureau of Labor Funds by about NT$176 billion (US$5.5 billion) in February, data released by the bureau showed Monday.

The accumulated gains, which reflect increases (or decreases) in the value of assets in the funds' portfolios and income on investments, totaled NT$252.76 billion during the first two months of this year, up NT$176.38 billion from a month earlier, the bureau said.

The bureau said while inflationary pressure in Washington continues to concern global financial markets, the U.S. economy remains resilient with a strong showing in the job market and improving manufacturing activity prompting investors to keep picking up equities in the U.S. markets.

In addition, the Chinese stock market also turned stable so investors appear more bullish about global financial markets, the bureau said.

In February, the MSCI World Index rose 4.28 percent with the MSCI Emerging markets rising 4.77 percent and the MSCI All Country World Index growing 4.33 percent.

At home, the Taiex, the benchmark weighted index on the Taiwan Stock Exchange (TWSE), also rose 1,077.21 points, or 6.02 percent in February on the back of a rally enjoyed by tech stocks amid continued enthusiasm toward artificial intelligence development.

In the month, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, soared 9.87 percent.

According to the bureau, investment allocations of the labor funds in overseas markets accounted for 57.21 percent of total investments in the two month period, while the domestic markets made up the remaining 42.79 percent.

The combined value of the funds managed by the bureau, including the Labor Pension Fund, the Labor Retirement Fund, the Labor Insurance Fund, the Employment Insurance Fund, and the Arrear Wage Payment Fund, totaled NT$6.288 trillion as of the end of February.

Based on that value, the gains represented a rate of return of 4.28 percent so far this year, according to the bureau.

The value of assets in the new Labor Pension Fund, launched in 2015, totaled NT$4.103 trillion at the end of February, the highest of any fund, and its rate of return so far this year to the end of February stood at 4.32 percent, the bureau said.

The Labor Retirement Fund, which has been in place since 1984, had about NT$1.006 trillion in assets as of the end of February, with a rate of return of 5.05 percent, the bureau said.

Over the longer term, from January 2013 to February 2024, the average annual rate of return on the labor funds has been 5.71 percent, the bureau added.

Looking ahead, the bureau said global financial markets remain concerned by uncertainties such as the timing of a rate cut cycle to be engineered by major central banks around the world, escalating geopolitical tensions and the impact on the global supply chain of attacks on commercial shipping in the Red Sea.

In addition, 2024 is a year when many countries, including the United States, will hold major elections, which is expected to create more uncertainties in financial markets.