Taiwan's export orders to rebound to 8.8% in February

Trade surplus stood at $2.3b.

According to DBS, Taiwan's February export orders (due today) are expected to show a modest rebound to 8.8% YoY, up from -2.8% in January.

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Combining the first two months this year, the average growth in export orders is estimated to be 3.0% YoY, slightly lower than 3.8% in 4Q13. Export momentum appears to have slowed since the beginning of this year, in line with the broad weakness seen in China’s and US’s economic data.

The monthly trade surplus remained solid at USD 2.3bn in Jan-Feb, with the slowdown in exports offset by the synchronous adjustment in capital goods imports.

Nonetheless, the disappointing export data has dampened confidence about the growth outlook ahead. Foreign net inflows into Taiwan’s stock market decreased to USD 0.8bn on average in Jan-Feb, down from USD 1.7bn in Oct-Dec13.

Meanwhile, capital outflows from local investors have also increased since 3Q13, due to the low interest rate environment at home and the widening of USD-TWD and CNY-TWD rate differentials.Going forward, positive economic data will be needed to support investors’ interest on the TWD assets.

In our base case forecast, we expect export numbers to improve from 2Q onwards. The downside risks are now higher than the upside risks, however, given the increased uncertainties in the Chinese economy.