Finance counsels

Taiwan’s export orders fell less than economists estimated in April as a pickup in demand from China offset a decline in sales to the U.S.

Orders, an indication of shipments in the next one to three months, fell 20.9 percent from a year earlier, moderating from a 24.29 percent retreat in March, the Ministry of Economic Affairs said in Taipei today. The median estimate of seven economists surveyed by Bloomberg was for a 25.4 percent drop.

Taiwan’s stock index has risen more than 46 percent this year on optimism China’s fiscal stimulus and closer relations with the mainland may help ease the island’s first recession since 2001. Vice Premier Paul Chiu said last week the economy will improve on a quarter-on-quarter basis over the rest of 2009.

“The near-term outlook for Taiwan’s export sector is likely to improve modestly,” Wang Qian, a Hong Kong-based economist at JPMorgan Chase & Co., wrote in a report. “The global capital-expenditure outlook has started to improve. The bounce in China’s domestic demand is also providing a trade lift to Taiwan.”

Taiwan’s economy contracted a record 10.24 percent last quarter as exports fell and businesses cut spending, a decline that may mark the trough in the island’s recession. The statistics bureau predicts the economy will return to growth by the final three months of this year.

Taiwan is starting to benefit from China’s 4 trillion-yuan ($586 billion) stimulus to spur the world’s third-biggest economy. China is the island’s largest export market.

Stocks, Currency

Today’s export-orders figures were released after the close of trading on the stock exchange. The Taiex index fell 0.04 percent to 6,734.46.

Taiwan’s dollar traded near the strongest level in five months today on speculation improving relations with China will help attract more foreign capital. The currency rose 0.1 percent to NT$32.655 against the dollar.

“As Taiwan adopts a more open cross-strait policy, the island’s economy will benefit from China’s recovery,” said Henry Lin, a foreign-exchange trader at Shin Kong Commercial Bank in Taipei creditscore.

President Ma Ying-jeou, during a speech marking his one-day anniversary in office last week, vowed to prioritize economic ties with China. The two economies on April 26 signed agreements to increase flights, boost financial cooperation and crime prevention.

Export orders to China and Hong Kong combined dropped 14.3 percent last month, compared with a 29.38 percent slump in March, today’s report showed.

Sales Rebound

Taiwan Semiconductor Manufacturing Co., the world’s biggest made-to-order chipmaker, forecast second-quarter sales and profitability that exceeded analyst estimates, signaling rising demand in China is driving a recovery in the chip industry.

Taiwan Semiconductor, a bellwether for the electronics industry because it makes chips for products ranging from mobile phones to games consoles, joins United Microelectronics Corp. in projecting a sales rebound this quarter.

“Certain Taiwanese tech exporters are reporting improved orders stemming from China’s subsidies to encourage the purchase of electronic appliances in rural areas,” JPMorgan’s Wang said.

Industrial production decreased 19.88 percent from a year earlier, after dropping a revised 25.79 percent in March.

Orders for electronics goods slid 14.76 percent last month, compared with a decline of 16.6 percent in March. Demand for information technology and communications products fell 16.26 percent, after sliding 18.56 percent in the previous month.

Orders from the U.S., Taiwan’s second-largest market, fell 22.31 percent from a year earlier, compared with a 23.4 percent decline in March, today’s report showed.

Source

Filed under: finance by Guru