Taiwan's July Money Supply Forms "Golden Cross" for 22nd Month

The annual growth of Taiwan's two major money supply indicators—M1B and M2—posted at 7.65% and 5.63%, respectively in July, with the former being higher to remain the so-called “golden cross” for the 22nd month.

Such phenomenon usually shows passbook deposits exceeding total capital supply in financial market, with idle funds flowing to stock market to drive rallies. In July the five sectors relevant to the performance of the stock market, including weighted stock price index, trading value, outstanding stock loans, outstanding value of stock accounts and outstanding NT-dollar deposits held by foreigners, all showed new highs of their kinds.

In July the outstanding value of stock accounts increased NT$49.1 billion (US$1.64 billion) from a month earlier to hit a new high of NT$1.45 trillion (US$48.33 billion). In the same month the inflow of foreign funds amounted to US$1.81 billion and foreign investors overbought shares in Taiwan's stock market reached NT$31 billion (US$1.03 billion).

As of the end of July the NT- dollar deposit held by foreigners rose a monthly NT$34.4 billion (US$1.15 billion) to NT$231.4 billion (US$7.713 billion) for a new 11-month high and the average weighted stock price index grew 245 points from the previous month to 9,474 points in July, a new 6.5-year high.

During the month the daily trading value in Taiwan's stock market averaged NT$111.5 billion (US$3.72 billion), the highest of its kind since March 2012; and the outstanding value of stock loans exceeded NT$300 billion (US$10 billion) to hit three-year high of NT$307.3 billion (US$10.24 billion) for a monthly increase of NT$31.9 billion (US$1.06 billion).

In the first seven months the annual growth of M1B stood at 8.53% and M2 at 5.85% with gap widening to 2.68 percentage points. (JL)