BOOSTING BUYING: A source said that the idea of pre-ordering vouchers online is being considered, but the preliminary plan is for people to buy them at post offices
A stimulus voucher program to be rolled out next month to boost consumption would be available not only to Taiwanese, but also foreign nationals and Chinese spouses who hold residency permits, a source familiar with the matter said yesterday. The government is fine-tuning the details of the program, which involves issuing vouchers for in-store purchases to revive buying amid the COVID-19 pandemic. During a radio interview on Monday last week, National Development Council (NDC) Minister Kung Ming-hsin (龔明鑫) said that the plan is to allow anyone, regardless of age or income level, to buy NT$3,000 (US$99.89) worth of vouchers for NT$1,000. They can then be used to shop at stores, buy train tickets or pay taxi fares. However, Kung did not specify whether all Taiwan residents or only citizens would be eligible for the vouchers. A source, who asked to remain anonymous, said that foreign nationals, including Chinese spouses of Taiwanese, who have obtained residency permits, would also be able to buy the vouchers. The source said that the NT$3,000 vouchers, which are to be issued in paper and electronic form, would also be available free of charge to 1.2 million mid-to-low-income households. The preliminary plan is for people to buy the vouchers at post offices nationwide, the source said. The idea of pre-ordering vouchers online is being considered, the source said, adding that they would be collected at convenience stores. Those who take advantage of the stimulus program by using an electronic or credit card payment method would receive a NT$2,000 refund after spending NT$3,000, the source added. The stimulus voucher program is expected to cost the government NT$50 billion, including voucher printing and related administrative costs, the source said. The final version of the program is to be announced by Premier Su Tseng-chang (蘇貞昌) tomorrow, before it is rolled out for
Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) is expected to recover quickly from the effects of COVID-19, as life returns to normal and thanks to the government’s domestic travel incentives, Yuanta Securities Investment Consulting Co (元大投顧) said in a note on Friday. THSRC’s business might have bottomed out after revenue fell 49.83 percent year-on-year to NT$2.03 billion (US$67.59 million) in April, the lowest in nearly 10 years, while combined revenue in the first four months dropped 26.44 percent to NT$11.63 billion, as the COVID-19 outbreak reduced ridership, the investment consultancy said. “The worst should be over in April as domestic tourism has started to resume in May after a half month without local coronavirus cases and THSRC carried out a promotion plan for students from May 27 and will provide more plans for all types of groups such as commuters,” Yuanta analyst Elle Yang (楊郁容) said in the note. THSRC on Friday said that it is to provide six extra services per week from today and add 33 extra services during weekends from Friday next week to meet increased demand due to the government’s incentive programs for domestic tourism as the coronavirus situation stabilizes, the company’s Web site says. “The ‘disease prevention tourism’ policy to be launched by the government by providing subsidies for tourism accommodation on July 1 should stimulate the domestic tourism industry and also increase demand for THSRC,” Yang said. As people reduced their use of public transportation for tourist and business trips amid the COVID-19 outbreak, THSRC’s daily average ridership fell 17.2 percent year-on-year to 151,000 people in the first quarter, while its passenger load factor dropped to 53.7 percent, compared with 67.5 percent a year earlier, a company document released after an investors’ conference on Thursday showed. As a result, the high-speed railway operator reported that net income decreased
The Financial Supervisory Commission (FSC) is reviewing Shin Kong Life Insurance Co’s (新光人壽) application to use fair-value accounting to assess its investment properties, the commission said on Thursday. The move came after Shin Kong Financial Holding Co’s (新光金控) board of directors on May 22 approved the insurance unit’s proposal to use fair-value accounting rather than cost accounting to assess non-self-use properties. Fair-value accounting estimates real estate based on market value, while the cost method calculates assets based on their original cost. “Life insurers would need our approval if they want to adopt different accounting standards. Shin Kong Life has filed its application, and we are still reviewing its documents,” Insurance Bureau Deputy Director-General Wang Li-hui (王麗惠) told a news conference in New Taipei City. Wang did not say when the commission would complete its review. The proposed change came after the life insurer saw its equity-to-asset ratio drop to 2.33 percent as of the end of March, below the commission’s requirement of 3 percent. The regulator monitors life insurers’ equity-to-asset ratio twice a year: at the end of June and at the end of December. If an insurer’s equity-to-asset ratio remains below 3 percent, the commission can limit their operations the following year, according to the Insurance Act (保險法). Shin Kong Life hopes that its net worth will grow using the new accounting method. By using fair-value accounting, the value of Shin Kong Life’s non-self-use real estate would rise to NT$186.3 billion (US$6.2 billion), NT$53.5 billion higher than the NT$132.8 billion it estimated using cost accounting, Shin Kong Financial told an investors’ conference on Thursday. Shin Kong Life also plans to book NT$46.8 billion of the increase in its net worth, which would raise its equity-to-asset ratio by 1.5 percentage points, climbing above 3 percent, it said. “It would be fairer to compare our net worth with those
Delta Electronics Inc (台達電), the nation’s leading power management solutions provider, has signed an agreement to acquire Canadian software firm Trihedral Engineering Ltd to bolster its smart production efforts, it said on Saturday. Delta said in a statement that it would acquire Trihedral for C$45 million (US$32.68 million) through its 100 percent-owned subsidiary Delta Electronics (Netherlands) BV. Trihedral specializes in supervisory control and data acquisition (SCADA) and industrial Internet of Things software, which would strengthen Delta’s hardware offerings in fast-growing areas such as automation, artificial intelligence and data analytics, it said. “The collection, monitoring and analyzing of data are critical to Delta’s two major growth engines of the future — smart manufacturing and smart cities. Trihedral has designed and sold market leading SCADA software for more than 30 years, in the segments of water and wastewater, oil and gas, energy and more,” Delta president and chief operating officer Simon Chang (張訓海) said. “Their unwavering focus on enhancing the SCADA platform for its present use and for use in new markets, including smart manufacturing, aligns perfectly with Delta’s long-term strategy,” Chang said. “The synergy of the two companies will quickly create unique solutions for our strategic global markets.” Trihedral president Glenn Wadden said that the firm has long served thousands of first-tier customers in North America and the UK, and has now set its sights on new markets such as China, other Asian nations and Europe. “We are looking forward to taking advantage of Delta’s global operation and business strengths to continue our rapid growth in the SCADA sector. This will include our capabilities to provide real value to customers of Industry 4.0 and smart city infrastructure,” Wadden said in a statement. Trihedral, founded in 1986, also creates VTScada software, a complete SCADA software suite and associated engineering services. With customers in more than 100 countries, Trihedral’s VTScada software
Domestic gasoline and diesel prices are to increase by NT$0.3 per liter this week to reflect higher international crude oil prices, CPC Corp, Taiwan (CPC, 台灣中油) and Formosa Petrochemical Corp (台塑石化) announced separately yesterday. That marks the fifth consecutive week of hikes. A week earlier, prices of gasoline and diesel increased NT$0.5 and NT$0.8 per liter respectively. After the adjustments, prices at CPC gas stations are to rise to NT$19.9, NT$21.4 and NT$23.4 per liter for 92, 95 and 98-octane unleaded gasoline respectively, while premium diesel is to increase to NT$17.4 per liter, the state-run refiner said in a statement. Global crude oil prices continued to increase last week due to the implementation of agreements to cut production by major oil-producing countries in the Middle East, while the COVID-19 outbreak has shown signs of easing, CPC said. As a result, the average cost of its crude oil per barrel rose to US$34.07, from US$33.26 the previous week, CPC said. After factoring in the depreciation of the New Taiwan dollar, which was down NT$0.064 against the US dollar last week, fuel prices would rise by 2.12 percent this week, it said. Formosa’s prices for 92, 95 and 98-octane unleaded are to rise to NT$19.9, NT$21.3 and NT$23.4 per liter respectively, with premium diesel increasing to NT$17.2 per liter, the company said. International oil prices also rose last week after several countries gradually lifted COVID-19 restrictions, despite uncertainties such as rising US-China tensions and Russia’s plan to ease production cuts this month, Formosa said. The new prices are to take effect today, the companies said.
‘ONE-STOP SHOP’: A Miaoli official said that the factory in the Jhunan section of the Hsinchu Science Park would create more than 1,000 jobs and boost prosperity
A new high-end IC packaging and testing plant planned by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in Miaoli County is expected to start operations in the middle of next year, Miaoli County Commissioner Hsu Yao-chang (徐耀昌) said. Hsu wrote on Facebook that TSMC, the world’s largest pure wafer foundry operator, would invest NT$303.2 billion (US$10.1 billion) to build the plant, the largest-ever single investment in Taiwan. However, TSMC declined to disclose the financial terms of the deal, while a company board meeting on May 12 approved a spending plan worth NT$168.2 billion as part of its investment plans. Construction of the plant, which is to be built in the Jhunan Township (竹南) section of the Hsinchu Science Park (新竹科學園區), is scheduled to be completed in May next year, with operations to begin a few months later, Hsu said. The investment is expected to create more than 1,000 jobs and boost prosperity in the area, he said. TSMC has stepped up preparations for the Jhunan investment plan and has been meeting with county government officials, with a meeting scheduled for the middle of this month to brief them on the construction work, he said. In November last year, the company passed an environmental impact assessment conducted by the Miaoli County Government. The plant is part of TSMC’s aggressive move into high-end IC packaging and testing services to provide one-stop shopping for chips with advanced 3D IC packaging and testing technology. TSMC operates advanced IC packaging and testing plants in Taoyuan, Hsinchu, Taichung and Tainan. In a separate statement, TSMC said it has launched the world’s first 7-nanometer (nm) Automotive Design Enablement Platform (ADEP), which would accelerate time-to-design for artificial intelligence inference engines, advanced driver-assistance systems and autonomous driving applications. Following mass production of its 7nm process in 2018, the launch of ADEP demonstrates the chipmaker’s industry-leading yield learning and
Factory activity in China last month expanded at a slower pace as the country attempts to get back on track after COVID-19 shutdowns, official data showed yesterday, with the global economic slump making the sector’s recovery difficult. China’s factories have stirred back to life after the lifting of strict lockdown measures imposed after the virus surfaced in the central city of Wuhan, but its spread worldwide has dragged down key foreign markets, weighing heavily on Chinese exports. The purchasing managers’ index (PMI), a key gauge of activity in China’s factories, was 50.6 last month, above the 50-point mark separating growth from contraction. However, the figure was down slightly from 50.8 the month before, and 52.0 in March, the Chinese National Bureau of Statistics said. Bureau senior statistician Zhao Qinghe (趙清河) pointed to weakness in China’s imports and exports, saying that “the epidemic situation and economic situation globally remain severe and complex, and foreign market demand is still shrinking.” Indices on new export orders and imports remained relatively low, Zhao said. The “momentum of economic recovery is steady and improving,” but there is weakness in some industries such as textiles and apparel, he said. Non-manufacturing PMI was at 53.6 last month, a slight increase from the month before, with the bureau flagging that the construction and service industries were showing signs of recovery. Business activity in the cultural, sports and entertainment industry remains low, with many entertainment venues still closed amid fears of a second wave of COVID-19 infections. Economists flagged concerns over employment, with United Overseas Bank Ltd (大華銀行) head of research Suan Teck Kin (全德健) saying that the employment index for manufacturing and services were below 50. There is a “need to watch on that, especially with China’s official job creation number adjusted downward quite significantly this year,” Suan said. Chinese Premier Li Keqiang’s (李克強) annual work report this year
A joint petrochemical complex planned by CPC Corp, Taiwan (CPC, 台灣中油) and Indonesia’s PT Pertamina is to be built in Balongan, West Java, Sindonews.com reported on Friday. The Indonesian news site cited Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto as saying that CPC and the state-run Indonesian oil and gas company have entered the final stage of talks over the investment. Investment in the planned petrochemical zone is expected to be US$12 billion, Airlangga said. The two companies are finalizing details of the plan, which is one of 245 national strategic projects being run by Indonesian President Joko Widodo’s government, which include toll roads, railroads, airports, harbors and refineries, as well as gas distribution and irrigation systems. The comments came after a meeting of the Indonesian government on Friday. Work on the 245 projects has continued despite the COVID-19 pandemic. Since CPC closed its fifth naphtha cracker in Kaohsiung in 2015, the Taiwanese firm has been seeking to relocate its naphtha operations to Indonesia. PREVIOUS PLAN CPC and PT Pertamina had previously discussed a plan that was scrapped after negotiations failed to make progress. In October 2018, the two companies signed an agreement on a framework for a joint petrochemical zone. In January, Indonesian Minister of Industry Agus Gumiwang Kartasasmita said that CPC is expected to invest about US$8.6 billion in the joint investment project.
There are signs that apparel orders might increase as lockdowns in the US and Europe eased over the past few weeks, which would lead to a faster-than-expected recovery for Makalot Industrial Co (聚陽), Nomura International (Hong Kong) Ltd Taipei Branch said in a note on Thursday. Based on Nomura’s supply-chain checks and considering the apparel industry’s order visibility, demand for casual clothes and fashionable sportswear is likely to increase from the third quarter rather than later in the year as it previously expected, the brokerage said. Makalot — a manufacturer of ready-to-wear apparel with global brand clients including GAP Inc, Fast Retailing Co’s GU sub-brand, Kohl’s Corp, Target Corp, Walmart Inc and Hanesbrands Inc — on May 14 reported that pretax profit in April fell 11.1 percent annually to NT$89.29 million (US$2.97 million). Revenue declined 37.71 percent to NT$1.13 billion in April, the lowest since November 2013, as clients deferred orders due to the COVID-19 pandemic. “We believe the weak April sales should mark the bottom, followed by a modest recovery in May and June. We believe monthly sales should accelerate further every month from the third quarter because we see a gradual easing of lockdowns in major US cities, which will likely boost end demand,” Nomura analyst Lee Shao-tang (李紹唐) said in the note, adding that US sales accounted for more than 70 percent of Makalot’s sales last year. “Following COVID-19, we see an uptick in demand and rush orders from June for isolation gowns, which carry higher margins and should bring revenue upside in the near term,” Lee said. The company has transferred some of its production to special protective gowns to help meet soaring demand for those that have P3 particulate filters, Makalot chairman Frank Chou (周理平) told local media in March. Shipments of higher-margin protective gowns began at the end of last month
Uber Technologies Inc, Lyft Inc and Airbnb Inc have slashed thousands of jobs. Salesforce.com Inc and Visa Inc are letting employees work remotely for months; Twitter Inc and Square Inc are allowing them to do so for good. For the companies’ hometown of San Francisco, the moves are early signs of a dire blow. In a city with a long history of booms, busts and natural calamities, the COVID-19 pandemic has suddenly upended nearly a decade of prosperity. While municipalities across the US are grappling with economic fallout from the virus, San Francisco stands to take a deeper hit given its high concentration of office jobs that make remote working easier, a tech industry battered by layoffs and a pricey real-estate market that has already driven out some residents. The city’s leaders predict a US$3.6 billion budget shortfall over the next four years, with the unemployment rate — as low as 2.2 percent a few months ago — to be at about 15 percent through September. If business taxes, the second-biggest source of revenue, continue to decline and the property tax base erodes, “all city services would suffer,” city Controller Ben Rosenfield said in an interview. It is a marked turn from the years of growth that made San Francisco a symbol of massive wealth — while also fueling gaping inequality and a homelessness crisis that has led to people sleeping on streets alongside swank office towers. The pain wreaked by the pandemic is only accelerating negative trends for the city, such as the departure of companies, conventions and residents to less-expensive areas, Berkeley Haas Fisher Center for Real Estate and Urban Economics chairman Ken Rosen said. “The boom is over and the question is how deep will the bust be,” said Rosen, who warned that the city might have diminished appeal to the tech
The initial public offering (IPO) market just got a shot of caffeine from JDE Peet’s BV. Do not expect other consumer listings to get such a rush. The owner of Peet’s Coffee, Douwe Egberts, Kenco and Tassimo on Friday priced shares in its IPO at 31.50 euros, in the upper half of the offering range, valuing the company at 15.6 billion euros (US$17.3 billion), and rose to about 35.50 euros in mid-morning trading. The biggest European IPO this year, pulled off in a swift 10 days, is a remarkable feat for a consumer business in the midst of a pandemic and a looming global recession. However, JDE Peet’s has been uncannily well-placed to capitalize on changing consumer habits during lockdown, the prospects for reopening and a resurgence in equity markets. The Dutch company was floated by JAB Holding Co, the investment fund backed by Germany’s billionaire Reimann family. Cornerstone investors, including funds run by George Soros’ firm, had agreed to take up one-third of the offering, setting the tone. In a world crowded with coffee chains, JDE Peet’s gets 80 percent of its sales from coffee that is drunk at home. That meant it benefited as corner cafes shuttered and people working from home were forced to become their own baristas. Now that they can start going out again, it is ready to serve them their favorite hot beverage too at the Peet’s Coffee chain. Just as Nestle SA benefited from people looking to stock up on the Starbucks-branded coffee it sells in supermarkets, so JDE Peet’s might gain new customers at its cafes if they discovered its products in the grocery store during lockdown. As consumers navigate post-lockdown life, JDE Peet’s looks well-insulated. That might explain why the valuation, as of mid-morning trading, approached that of Starbucks Corp on a calendar 2019 enterprise-value-to-EBITDA basis. With
From the customer’s perspective, car rental is a straightforward business. The only uncertainty is whether the hire company will charge you for the scratch they discover when you hand back the vehicle. Hertz Global Holdings Inc’s bankruptcy protection filing on Friday last week was a reminder that today even the simplest business models are underpinned by a lot more financial complexity than meets the eye. The proximate cause of Hertz’s demise was of course the sudden collapse in bookings caused by COVID-19 travel restrictions. The company’s monthly revenue last month fell 73 percent year-on-year, a shortfall that even the most resilient companies would struggle to withstand for long. However, Hertz’s complicated financial plumbing contributed to it becoming one of the most high-profile companies to seek protection from creditors during the pandemic. In the decade preceding its collapse, Hertz took on too much debt, participated in overpriced mergers and acquisitions, and was accused of playing accounting games to pad its earnings. So when disaster struck and a request for a government bailout was rejected — rightly in my view considering the top shareholder, Carl Icahn, is worth about US$18 billion — Hertz was already standing far too close to the precipice. Regrettably, COVID-19 will probably expose more of this type of corporate frailty, both in the US and around the world. Hertz’s debt binge began when it was acquired by private equity firms from Ford Motor Co in 2005; the new owners quickly took out a US$1 billion dividend. Piling on debt juiced the potential returns for the owners and helped pay the inflated US$2.3 billion price tag for the Dollar and Thrifty brands in 2012, which Hertz struggled to integrate. Hertz was only able to amass an eye-watering total of US$19 billion in borrowings thanks to a massive program of asset-backed lending, which became
‘NOT AS DRAMATIC’: Investors were afraid that Donald Trump might announce policies harmful to the US economy, but he did not, a chief investment officer said
US stocks finished mostly higher on Friday after US President Donald Trump announced measures against China in response to new security legislation that were less threatening to the US economy than investors had feared. The Dow Jones Industrial Average ended the session slightly lower, but all three indices rose for the week and registered a second straight month of gains. The S&P 500 added 17.8 percent for last month and this month, its biggest two-month percentage gain since 2009. The S&P 500 initially extended losses after Trump said he was directing his administration to begin the process of eliminating special treatment for Hong Kong in response to China’s plans to impose new security legislation in the semi-autonomous territory. However, Trump made no mention of any action that could undermine the “phase one” trade deal that Washington and Beijing struck early this year, a concern that had cast a cloud over the market throughout the week. “He began speaking in a very tough tone,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina. “The market was worried he was going to announce something substantial, something detrimental to the US economy. Then, as he spoke, it became clear the actions being taken were not going to be as dramatic as originally feared.” Trump also said the US is terminating its relationship with the WHO, something he had threatened to do earlier this month. S&P 500 technology shares gave the index its biggest boost, while financials were the biggest drag. The latest confrontation between the US and China has fueled concern that worsening tensions between the two world’s largest economies could derail the recent sharp gains in the stock market. Expectations of a quick economic recovery from the COVID-19 pandemic have driven the S&P 500 up more than 30 percent from its March lows. The Dow Jones
European stocks tumbled on Friday on concerns that mounting tensions between the world’s two largest economies could spiral further. US President Donald Trump harshly criticized China’s handling of the COVID-19 pandemic, blaming the country for the deaths of 100,000 Americans, and announcing new actions, including an end to US funding for the WHO. He also ordered probes of Chinese companies listed on US financial markets. However, he made no mention of the “phase one” trade agreement with China that walked back earlier trade tariffs, nor did he threaten new levies on US imports from the country. Earlier, bourses in Paris, Frankfurt and London retreated in anticipation of Trump’s speech, which was delivered after European markets closed. The pan-European STOXX 600 fell 1.4 percent on Friday, but rose 3 percent for the week. Week-end and month-end trading was playing a part in Friday’s price action, CMC Markets chief market analyst Michael Hewson. The biggest gainers of the week — automakers, travel and leisure stocks, and banks — fell 2 to 3 percent. Still, hopes of a global economic recovery amid stimulus programs and several countries emerging from lockdowns helped the STOXX 600 rise just more than 3 percent for the month. Coffee maker JDE Peet’s BV, one of the few big companies to go public during the coronavirus crisis, jumped 13.5 percent in its market debut, valuing it at 15.6 billion euros (US$17.3 billion). AstraZeneca PLC gained 1.9 percent as its top-selling drug Tagrisso has been shown to hold back a certain type of lung cancer when diagnosed at an early stage.
Asian shares fell on Friday as investors awaited a news conference about China by US President Donald Trump later in the day. Trump said the US would terminate its relationship with the WHO over its handling of the COVID-19 outbreak in China and would begin the process of withdrawing special trade benefits for Hong Kong because of the Chinese government’s imposition of a new security law in the semi-autonomous territory. His announcements came after markets closed in Asia. Benchmarks declined in Hong Kong, Tokyo and Sydney, but rose in Shanghai. The Chinese National People’s Congress on Thursday approved a national security law aimed at suppressing “secessionist and subversive” activity in Hong Kong, overriding any potential opposition by local lawmakers. “The concerns are that this escalates over the course of the summer,” Prudential Financial Inc chief market strategist Quincy Krosby said. “It’s like lighting a match.” Hong Kong stocks fell on Friday to end the month lower amid the tensions. At the close of trade, the Hang Seng Index (HSI) was down 171.29 points, or 0.74 percent, at 22,961.47. The Hang Seng China Enterprises (HSCE) index rose 0.1 percent to 9,561.03. For the week, the HSI was up 0.1 percent, while the HSCE gained 1.4 percent. For the month, the HSI shed 6.8 percent, while the HSCE lost 4.8 percent. The Hong Kong government warned Washington that withdrawing its special US status, which has underpinned the territory as a global financial hub, could be a “double-edged sword” and urged the US to stop interfering in internal affairs. In Taipei on Friday, the TAIEX fell 0.02 percent to 10,942.16, up 1.2 percent for the week. Japan’s Nikkei 225 index on Friday fell 0.2 percent to 21,877.89, but still rose 7.3 percent for the week. Australia’s S&P/ASX 200 on Friday lost 1.6 percent to 5,755.70, paring its weekly gain to 4.7 percent. South
Oil posted its biggest monthly advance on record, just a few weeks after prices made a dramatic plunge below zero. Crude surged about 88 percent this month, with US futures on Friday rising above US$35 a barrel for the first time since March, driven by massive supply curbs by producers across the world. Still, prices are well below levels at the start of the year and demand that was crushed by the COVID-19 pandemic might need to show a sustained improvement for the rally to extend further. For now, the outlook for consumption looks bleak, although it is on the mend. While virus-related lockdowns are easing, demand is not yet roaring back in the US. Fuel sales that were clobbered in European nations, such as Spain and Italy, would take time to recover. The number of rigs drilling for oil in the US fell for the 11th week, stemming the massive glut of crude that flooded the market. Yet there is a risk that oil’s advance could tempt producers to turn on their taps again. “At the end of the day, what is driving everything is fuel demand,” said Tom O’Connor, senior director of petroleum markets at global consultancy ICF. US crude futures fluctuated on Friday as US Federal Reserve Chairman Jerome Powell defended aggressive action to shield the economy as the pandemic took hold. Prices surged at the close, with West Texas Intermediate (WTI) crude settling 5.3 percent higher at US$35.49 a barrel, after falling as much as 4 percent earlier in the day. The contract is up 4.6 percent for the week. Futures posted the biggest monthly jump in data going back to 1983. Brent crude for July delivery, which expired on Friday, rose US$0.04 to US$35.33, closing below WTI for the first time since 2016. The contract fell 1 percent for the
The US dollar edged lower against the euro on Friday, hurt by month-end flows and as the common currency continued to enjoy a boost from the EU’s recently announced plan to prop up the bloc’s coronavirus-hit economies with a 750 billion euro (US$828 billion) recovery fund. The greenback was little moved after US President Donald Trump said that he was directing his administration to begin the process of eliminating special treatment for Hong Kong, in response to China’s plans to impose new security legislation in the territory. “I think traders were bracing for the possibility of new tariffs or sanctions or a pullback on ‘phase one,’ which, of course, didn’t happen,” said John Doyle, vice president of dealing and trading at Tempus Inc in Washington. The US dollar index, which compares the greenback with six major currencies, slipped 0.09 percent to 98.30, down 1.6 percent for the week and falling 0.7 percent for the month. In Taipei, the New Taiwan dollar rose against the greenback, gaining NT$0.013 to close at NT$30.032, little changed from Friday last week’s NT$30.009. The euro on Friday rose about 0.13 percent to US$1.1101, its fourth straight day of gains against the greenback. The euro’s rally this week has pushed it over its 200-day moving average for the first time since late March and lifted it about 1.7 percent for the week, its best weekly gain in nine weeks. Much of the euro’s move was driven by optimism generated by the European Commission’s stimulus plan announced this week, as well as investors’ improved appetite for risk-taking as global economies gradually move to reopen after coronavirus-linked shutdowns, analysts said. Month-end adjustments to portfolio hedges, after a more than 3 percent rally this month for US stocks, was also weighing on the US dollar, AxiCorp Financial Services Pty chief global markets strategist Stephen Innes said. Additional
A HEAVY BLOW: While the Russia-OPEC agreement should help prop up prices hit by the pandemic, the US and China continue to expand petrochemical production
Oil refiner Formosa Petrochemical Corp (FPCC, 台塑石化) yesterday gave a gloomy business outlook for this year, citing the COVID-19 pandemic and tumbling crude oil prices. “We have suffered immensely since the US-China trade conflict last year ... [and we are facing more] challenges with the ongoing pandemic and drops in oil prices,” Formosa Petrochemical chairman Chen Bao-lang (陳寶郎) told shareholders at the annual general meeting in Taipei. After posting a 38.7 percent year-on-year decline in net profit to a five-year low of NT$36.8 billion (US$1.23 billion) last year, Formosa Petrochemical reported a loss of NT$9.99 billion for last quarter due to plummeting crude oil prices and weakening demand amid the pandemic. “It [COVID-19] has dealt a heavy blow to market demand for crude oil, as people have avoided going shopping and flights have been canceled,” Chen said. Demand shrank further as the oil price dispute that broke out between Russia and Saudi Arabia late last quarter led the oil market to the brink of collapse, Chen added. In the first four months of this year, the company posted a 27.96 percent annual decline in revenue to NT$159.68 billion. “Russia and OPEC reached an agreement to cut production from the start of this month, which should help prop up oil prices,” Chen said. However, a complete recovery in prices appears improbable in the short term, as the US and China continue to expand their petrochemical production, Chen said. He forecast crude prices of about US$40 per barrel for benchmark Dubai crude by the end of the year, a sizable gap compared with January prices of nearly US$70 per barrel. “Ultimately it [oil price] would depend on the global economy, which in turn is dependent on the outcome of the current pandemic,” Chen said, adding that the development of a vaccine remains crucial. Chen expressed the hope that market demand might see
ELECTRONICS BOOST: Corporate spending, particularly in the manufacturing sector, has become the driving force behind Taiwan’s gross domestic expenditure on R&D
Taiwan’s gross domestic expenditure on research and development (R&D) is ranked third-highest in the world as it reached 3.36 percent of total gross domestic product, or NT$616 billion (US$20.55 billion), in 2018, the Ministry of Economic Affairs Department of Statistics said in a report yesterday. That surpassed Japan’s 3.26 percent, the US’ 2.83 percent and China’s 2.19 percent. Taiwan’s gross domestic expenditure on R&D closely followed Israel’s and South Korea’s, which remained the top two spenders on R&D at 4.9 percent and 4.53 percent respectively in 2018. Corporate spending has become the main driving force behind Taiwan’s gross domestic expenditure on R&D, making up 80.3 percent of total expenditure, on a level with that of South Korea, ministry data showed. Japan, China and the US posted slightly lower figures at 79.4 percent, 77.4 percent and 72.6 percent respectively. The ministry data also showed that Taiwan’s spending on R&D is concentrated on technical development, which increased 8.2 percent from 2017 to make up 69.7 percent of total expenditure in 2018. Corporate spending was highest in the manufacturing sector, namely the computer, electronics and optical components industry, which made up 73.6 percent of total corporate expenditure on R&D in 2018. By comparison, South Korean firms in this industry made up only about 51.9 percent of total R&D expenditure, while in Japan and China, it only made up 19.5 percent and 16.2 percent respectively. Taiwanese companies’ R&D spending in the service sector only made up 8.2 percent of total corporate expenditure on R&D. Meanwhile, Taiwan’s spending on basic research declined by 3.6 percentage points over the same period, making up only 7.3 percent of total expenditure. This is mainly due to budget cuts in government spending, as well as in higher education, the report said. However, Taiwan’s spending on applied research increased 8 percentage points from 2017 to 2018, contributing 23 percent of
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