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Taiwan's Two Money Supply Indicators on Downtrend in June

2014/08/06 | By Judy Li

The annual growth of Taiwan's two major money supply indicators—M1B and M2—posted at 7.46% and 5.74%, respectively, with the former being a 13-month low and the latter four-month low, according to Taiwan's central bank.

The central bank attributes the negative growths in the two indicators to slowing  increase of investment and loans extended by banks here. In June the annual growth of M1B exceeded that of M2 for the 21st consecutive month, with the gap between the two narrowing to 1.72 percentage points to form the so-called “Golden Cross”.

In the first six months the annual growth of M1B averaged 8.68% and M2 5.89%. M1B typically indicates stock market trends, with  the annual growth of M1B higher than that of M2 in H1 suggesting abundant money supply in the financial market.

At the end of June the outstanding value of stock trading accounts increased NT$13.9 billion (US$463.33 million) from a month earlier to a record high of NT$1.3968 trillion (US$46.56 billion), to boost the weighted stock price index of Taiwan's stock exchange to a six-year high of 9,229. (JL)