Taiwan manufacturing PMI soared 55.8 in July

It's the highest in over 3 years.

A private sector survey says that in July, manufacturing PMI in Taiwan has risen to 55.8, the highest over 3 years.

According to a research note from DBS, the PMI subcomponents, including new orders, new export orders and output have showed a broad-based notable expansion.

As such, positive results from the official export orders data are expected.

Demand for electronics components should be particularly strong, ahead of the upcoming release of new mobile products in the global markets.

Here's more from DBS:

Taking into account the distortion of base effects, however, the YoY growth in export orders is projected to ease slightly to 7-8% in July after a bump-up to 10.6% in June.

As far as the external balance is concerned, the current account is expected to post a steady and strong surplus of USD 16bn in 2Q, as inferred from the monthly data capturing merchandise trade and tourist arrivals.

It is also clear that foreign capital inflows were buoyant in 2Q.

According to statistics from the financial supervisory authority, foreign investors' net remittances into Taiwan's stock market rose USD 11.7bn in the Apr-June period, the largest quarterly increase seen since 1Q08.

Going forward, if the export outlook continues to improve as expected, the external balance position will strengthen further on the back of expanding current account surplus and rising capital inflows.

This will mean appreciation pressures on the TWD.