Taiwan’s outbound direct investment reached a new high in the second quarter, as tech firms including Taiwan Semiconductor Manufacturing Co (台積電) and Hon Hai Precision Industry Co (鴻海精密) were keen to send funds abroad to expand their operations, the central bank said last week.
Data compiled by the central bank showed that outbound direct investment during the April-to-June period totaled US$10.7 billion, up from US$2.99 billion in the same period last year.
Taiwan’s net fund outflow in the second quarter hit US$14.57 billion in its financial account, which measures the flow of direct investment and portfolio investment, the central bank said, adding that the second quarter marked the 56th consecutive quarter of net fund outflows.
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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, it said.
Taiwan’s portfolio investment account in the second quarter 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 outbound 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 foreign investors, it added.
Meanwhile, Taiwan’s current account, which mainly measures the exports and imports of the nation’s merchandise and services, registered a surplus of US$21.82 billion in the three-month period.
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 integrated circuits, and information and communications technology products.
Meanwhile, the services account recorded a deficit of US$4.06 billion, up from a US$2.29 billion deficit a year ago, largely due to an increase in travel expenses overseas, 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 NT$26.58 trillion (US$850 billion).
Addressing concerns that investors would keep moving funds out of the country and into US dollar-denominated assets, the central bank said net fund outflows were common among countries such as Taiwan, which have 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.
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