Central bank likely to up interest rate in Sept. 2015: Barclays

By John Liu, The China Post

TAIPEI, Taiwan — The central bank is likely to raise the interest rate in September 2015, later than the market’s expectation, according to British banking company Barclays’ economist Leong Wai Ho (�簶��). The market had expected that the central bank would raise the interest rate by 0.125 percent in March next year.

Leong said that excess reserves had stayed at a low level before October this year, after which the amount began to climb, reaching NT$26.8 billion per day.

Therefore, Leong believes that the central bank will taper off its support to the capital market, and raise the interest rate by 0.125 percent in September next year, at the earliest. Barclays pointed out that Taiwan’s exports outperformed in November, growing 3.7 percent year-on-year. Not only was the growth much higher than the 0.7-percent growth registered in October, it also beat the 2.7-percent market expectation. After making seasonal adjustments, November exports also saw growth on a monthly basis, reversing the decline in the previous two months. As economic growth in mainland China stagnate, Taiwan’s exports to the giant nation have declined. Nevertheless, the degree of decline is smaller compared with South Korea’s exports to mainland China, said Barclays.

South Korea’s exports to mainland China took a greater hit after the consumption power of the Chinese middle class waned, Barclays said. Taiwan, on the other hand, saw its exports of base metals, electronics devices, precision machinery and household appliances grow in November. The US Remains the Bellwether of Global Economy Capital Trust Investment Corp. (�s�q���H) held a 2015 outlook investment conference yesterday, where its chief investment officer Wu Wun-tong (�d���P) predicted that Taiwan will see low growth, low inflation and low interest rates in the coming year, making it more difficult to make investments. The institutional investor believes that the U.S. will remain the bellwether in the global economy. Wu pointed out that the U.S. has the best economic figures of the world’s major economies. The U.S. Fed is expected to raise interest rates in mid-2015, and Wu said it is a sign that the U.S. has a stable economy. There are also merits in making investments in Europe. Despite worse-than-expected economic figures in the eurozone, some companies in the region have had good profitability, according to Capital Trust’s mutual fund manager You Hui-lan (�忷��). The depreciation of the euro is also a positive for local business, she said. As nations around the world continue the quantitative easing measure, the U.S. dollar will remain relatively strong in the near future, You said. Capital Trust Investment picks electronics stocks as the choice of investment, and favors Apple and display panel concept stocks. The company also recommended Internet of Things, robotics and LTE concept high-growth stocks.