Taiwan's direct overseas investment hits new high in Q2

Taipei, Aug. 24 (CNA) Taiwan's direct overseas investment reached a new high in the second quarter of this year, as tech firms were keen to send funds abroad for expansion, according to the central bank.

Data compiled by the central bank showed direct overseas investment during the April-June period totaled US$10.7 billion, up from US$2.99 billion in the same period last year.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) committed funds for projects in the United States and Japan in the second half of the year, according to Ministry of Economic Affairs data.

Other tech firms including iPhone assembler Hon Hai Precision Industry Co. also redirected funds to foreign markets.

In the second quarter, Taiwan's net fund outflow hit US$14.57 billion in its financial account, which measures the flow of direct investment and portfolio investment, the central bank said. The second quarter marked the 56th consecutive quarter of a net fund outflow.

The direct investment account recorded a net asset increase of US$6.54 billion in the second quarter. Of the components in the direct investment account, outbound direct investment by residents and inward direct investment by nonresidents posted net increases of US$10.7 billion and US$4.16 billion, respectively.

In the second quarter, the portfolio investment account saw a net asset increase of US$13.06 billion. Of the components in the portfolio investment account, residents' portfolio investment abroad registered a net increase of US$16.05 billion in the wake of a rise in holdings of overseas debt securities, the central bank said.

In addition, nonresidents' portfolio investment posted a net increase of US$2.99 billion, mainly due to a rise in Taiwanese equity holdings by reign investors.

In the three-month period, Taiwan's current account, which mainly measures the exports and imports of a country's merchandise and services, registered a surplus of US$21.82 billion.

Under the current account, the services account recorded a deficit of US$4.06 billion in the second quarter, up from a deficit of US$2.29 billion a year ago largely due to an increase in travel expenses overseas.

The central bank said the travel account recorded a deficit of US$2.34 billion, the second highest in history, as many local travelers were keen to go overseas.

In the second quarter current account, the goods trade surplus fell by US$1.22 billion from a year earlier to US$20.82 billion on the back of an increase in imports of ICs and information, communication and technology products to meet exports-driven demand amid an artificial intelligence boom, the central bank said.

In the first half of this year, Taiwan's financial account saw a US$43.59 billion net fund outflow, while its current account recorded a surplus of US$51.49 billion, the central bank said.

Over the past 56 quarters, accumulated net fund outflows hit almost US$850 billion or about NT$27.20 trillion.

Addressing concerns that investors will keep moving funds out of the country and into U.S. dollar-denominated assets, the central bank said net fund outflows under the financial account were common among countries like Taiwan with long-term current account surpluses.

Japan, Singapore, South Korea and Germany all have long-term current account surpluses and tend to record net financial account outflows, the central bank said.