Taiwan's Financial Account Sees 15th Straight Quarterly Net Outflow of US$12.95B. in Q1, 2014

Due to increasing overseas investments by insurers and the remittance of renminbi (RMB) deposits, Taiwan's financial account witnessed 15th consecutive quarterly net outflow of US$12.95 billion in the first quarter, yet down US$3.47 billion from US$16.42 billion of a quarter earlier, according to the statistics released by the central bank.

In the first three months people in Taiwan made outbound investments in securities, resulting in a net outflow of US$11.46 billion while foreign investors in Taiwan's stock market posted net inflow of US$4.88 billion. As a result, financial accounts registered a net outflow of US$6.58 billion for stock investment, up by US$820 million from the corresponding value of the previous quarter.

Insiders indicate that over the past 15 quarters, the net outflow of financial accounts amounted to US$129.06 billion or about NT$4 trillion, which may enable the island to build up 8.5 high-speed railways or 68 “Taipei 101” tower buildings.

The current account witnessed a sizable surplus of US$15.49 billion in the first quarter and the spending under capital account during the quarter was only US$20 million. In the same quarter, the overall balance of payments registered a surplus of US$2.62 billion.

Financial experts explain that balance of payments, consisting of current accounts, capital accounts, and financial accounts, usually reflects the financial situation of a country or an area. They point out that countries with surplus in current accounts usually see net outflow of financial accounts such as Singapore, South Korea and Germany. The net outflow of financial accounts sometimes helps stabilize finance in a country. (JL)