Taiwan's February export orders to shrink 5.2%

Exports sharply dropped 15.7%.

According to DBS, export orders are expected to contract -5.2% YoY in February, down from 17.9% in January. Exports reported a sharp decline of -15.7% during the Chinese New Year in February (vs. 21.8% in Jan).

Export orders could outperform exports, however, because the orders data are less affected by the number of working days compared to the shipments data.

Here's more from DBS:

Export orders are a relatively better gauge for the underlying external demand conditions. The elevated sequential trend in export orders (31.8% 3M/3M saar as of Jan) pointed to a steady recovery in exports in the coming months.

On the demand side, the recovery outlook in Taiwan’s key export markets is more or less unchanged. Compared to one quarter ago, DBS has revised down US growth forecast by 0.3ppt for 2013 (reflecting budget spending cuts), while raised Japan’s forecast by 0.8ppt on the other hand (twin easing of fiscal and monetary policies) and kept the GDP estimates for China and Europe unchanged.

On the exchange rate front, we note that the TWD REER is undervalued compared to the long-term equilibrium and despite JPY depreciation, the TWD/JPY remains significantly lower than the fairly valued levels.

The price competitiveness of exports shouldn’t be a worry.