Taiwan’s monetary policy may not be changed any time soon as the recovery of the economy, along with country-related exchange traded fund (ETF), is still under way and the government wants to keep moving in the right direction.

  • Officials expect consumer prices, a key indicator for policy decisions, to remain stable, with the core CPI at around zero.
  • Taiwan’s main stock index has risen more than 60% so far this year, outperforming Hong Kong’s Hang Seng and South Korea’s Kospi. The index could rise even more by the first half of next year, says one analyst.
  • Hsien-lin Huang, an official at the Ministry of Economic Affairs, stated that Taiwain may allow Chinese investors to purchase a stake in its flat-panel and computer-chip industries, writes Jonathan Burgos for Bloomberg. Flat-panel and semiconductor companies may also be allowed to set up plants in China and buy stakes in Chinese companies.
  • Improving relations with China overall appear to be benefiting the economy. An economic cooperation framework agreement to allow cross-shareholdings of banks and insurers is estimated to create 273,000 jobs and lift exports, reports Weiyi Lim for Bloomberg.

Despite of signs of an economic recovery, rates are being kept as is in an attempt to buffer a tenuous employment situation and export outlook. Exports are being bolstered by demand from China but joblessness remains at a record 6.0%.

The markets expect the Central Bank to begin raising rates in the second or third quarter of next year. The Central Bank has already stated that it will consider raising rates if inflation, GDP and joblessness reach pre-crisis levels.

  • iShares MSCI Taiwan Index (NYSEArca: EWT): up 62.3% year-to-date

ETF EWT

For more information on Taiwan, visit our Taiwan category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.