Taiwan stock warning? M1B and M2 annual growth rates continued to show a death cross in October | Central Bank | The Epoch Times

Taiwan stock warning? M1B and M2 annual growth rates continued to show a death cross in October | Central Bank | The Epoch Times
Taiwan stock warning? M1B and M2 annual growth rates continued to show a death cross in October | Central Bank | The Epoch Times

Update: 2022-11-24 9:05 PM
Label: tags:
central bank, Taiwan stocks

[The Epoch Times, November 24, 2022](Reported by Epoch Times reporter Zhang Yuanzhang, Taipei, Taiwan) The Central Bank of Taiwan released the financial situation in October on the 24th, and the annual growth rates of M1b and M2 showed a “death cross” for two consecutive months. The balance of securities transfer deposits of retail investors has hit a four-month low, and the market is worried about the hidden worries of the momentum of Taiwan stocks. Central bank officials emphasized that the central bank will observe M1b and M2 data separately and individually, and will not combine them for interpretation.

According to the data released by the central bank, the annual growth rate of M1B has dropped to 5.18%, and the annual growth rate of M2 has risen to 7.32%. The annual growth rate of M1b is lower than that of M2, which is regarded as a “death cross” and is one of the signals of market capital momentum.

The central bank said that the reason for the decline in M1B is the slowdown in the growth of demand deposits; the increase in the annual growth rate of M2 is due to the increase in the growth of foreign exchange deposits and the increase in the annual growth rate of lending and investment.

The Central Bank announced the October financial overview on the 24th. Two major data revealed hidden concerns about the kinetic energy of Taiwan stocks. First, the annual growth rates of M1B and M2 in October were 5.18% and 7.32%, respectively, reappearing the “death cross”. (central bank)

The central bank official said that M1B is related to living balance and stock market changes, while M2 includes fixed deposits and foreign exchange deposits, which are related to economic activities. The central bank’s position will be interpreted separately, and they will be viewed separately. They will not be combined to judge that it is a death cross.

Officials said that the main reason for the expansion of M2 is that people have transferred their living savings to fixed savings due to the impact of interest rate hikes this year;

In addition, the balance of foreign exchange deposits, one of the components of M2, was 8.78 trillion yuan, a record high in history, and the annual growth rate expanded to 23.52%, a record high since November 2013. Officials said that the reasons include: the life insurance industry handles the repatriation of foreign securities investment, the proportion of Taiwanese people investing in foreign securities has decreased, and some banks have implemented a special project for foreign exchange deposits.

However, the balance of securities transfer deposits in October, which symbolizes the momentum of retail funds, fell below the 3 trillion yuan mark. The ten-day average balance fell by 117.4 billion yuan.

The official said that the stock price index went down in October, but it rebounded at the end of October, and the increase was further expanded in November. The attitude of retail investors towards Taiwan stocks should have a different interpretation in November.

According to the central bank’s announcement, the proportion of natural person stock market transactions fell from 56% in the previous month to 52.7% in October, the lowest since February 2017, showing that the decline in the stock market has impacted the confidence of retail investors entering the market.

Editor in charge: Yuzhen

The article is in Chinese

Tags: Taiwan stock warning M1B annual growth rates continued show death cross October Central Bank Epoch Times