The central bank on Sunday issued a rare statement to dismiss claims by Japan’s Nomura Securities Co that six economies, including Taiwan’s, are vulnerable to financial crises over the next three years given rising bubble signs.
Nomura said that its proprietary indicator showed that Taiwan, Germany, Japan, the Netherlands, Sweden and the US are susceptible to financial crises over the next 12 quarters, judging by their ratios of private credit to GDP ratios, debt service ratios, equity prices, property prices and effective foreign-exchange rates.
A Singapore-based research team at Nomura raised the alarm based on Cassandra data modeling, which it said has correctly predicted two-thirds of the past 53 crises in 40 countries since the early 1990s.
Photo: Bloomberg
“The Nomura report is inaccurate regarding Taiwan as it fails to understand that healthy economic fundamentals, rather credit inflation, push up the nation’s five indicators,” the central bank said.
Trade tensions between the US and China, and the ensuing realignment of supply chains, has allowed Taiwanese firms to enjoy order transfers and an increase in bank loans resulting mainly from companies shifting production lines home from China, the central bank added.
The continuation of money printing by major central banks helps drive up property prices in Taiwan, and the central bank has introduced selective credit controls to slow the pace, it said, adding that bad loans from real-estate lending are low.
Although Taiwanese lenders have increased loans to small and medium-sized borrowers to help them manage the pains induced by the COVID-19 pandemic, all loans are covered by the Small and Medium Enterprise Credit Guarantee Fund of Taiwan (信保基金), it added.
The central bank dismissed concerns over asset price bubbles in Taiwan, saying that strong corporate earnings and a bright outlook for exports account for the rallies in the local bourse this year and last year.
The appreciation in the local currency has more to do with export-driven current account surpluses rather than hot money influxes, it said, adding that it would intervene whenever it spots abnormal fund movements that could destabilize the foreign-exchange market.
“Overall, Taiwan is not in danger of having a financial crisis,” the bank said, adding that banks and life insurance companies all report improving profitability and capital adequacy.
Hon Hai Precision Industry Co (鴻海精密) yesterday said that its research institute has launched its first advanced artificial intelligence (AI) large language model (LLM) using traditional Chinese, with technology assistance from Nvidia Corp. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), said the LLM, FoxBrain, is expected to improve its data analysis capabilities for smart manufacturing, and electric vehicle and smart city development. An LLM is a type of AI trained on vast amounts of text data and uses deep learning techniques, particularly neural networks, to process and generate language. They are essential for building and improving AI-powered servers. Nvidia provided assistance
DOMESTIC SUPPLY: The probe comes as Donald Trump has called for the repeal of the US$52.7 billion CHIPS and Science Act, which the US Congress passed in 2022 The Office of the US Trade Representative is to hold a hearing tomorrow into older Chinese-made “legacy” semiconductors that could heap more US tariffs on chips from China that power everyday goods from cars to washing machines to telecoms equipment. The probe, which began during former US president Joe Biden’s tenure in December last year, aims to protect US and other semiconductor producers from China’s massive state-driven buildup of domestic chip supply. A 50 percent US tariff on Chinese semiconductors began on Jan. 1. Legacy chips use older manufacturing processes introduced more than a decade ago and are often far simpler than
STILL HOPEFUL: Delayed payment of NT$5.35 billion from an Indian server client sent its earnings plunging last year, but the firm expects a gradual pickup ahead Asustek Computer Inc (華碩), the world’s No. 5 PC vendor, yesterday reported an 87 percent slump in net profit for last year, dragged by a massive overdue payment from an Indian cloud service provider. The Indian customer has delayed payment totaling NT$5.35 billion (US$162.7 million), Asustek chief financial officer Nick Wu (吳長榮) told an online earnings conference. Asustek shipped servers to India between April and June last year. The customer told Asustek that it is launching multiple fundraising projects and expected to repay the debt in the short term, Wu said. The Indian customer accounted for less than 10 percent to Asustek’s
Gasoline and diesel prices this week are to decrease NT$0.5 and NT$1 per liter respectively as international crude prices continued to fall last week, CPC Corp, Taiwan (CPC, 台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. Effective today, gasoline prices at CPC and Formosa stations are to decrease to NT$29.2, NT$30.7 and NT$32.7 per liter for 92, 95 and 98-octane unleaded gasoline respectively, while premium diesel is to cost NT$27.9 per liter at CPC stations and NT$27.7 at Formosa pumps, the companies said in separate statements. Global crude oil prices dropped last week after the eight OPEC+ members said they would