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Taiwan 5-Year Bond Yield Touches Six-Week Low on Growth Concern

The yield on Taiwan’s five-year bonds fell to a six-week low as investors sought the safety of sovereign debt amid concern regional economic weakness will hurt the island’s exports. The local currency was steady.

Global funds sold $288 million of local stocks in the last three days, taking net sales in April to $445 million, exchange data show. Gross domestic product growth in China, Taiwan’s biggest overseas market, slowed in the first quarter as factory output weakened, a sign the nation’s recovery from the slowest expansion in 13 years has lost momentum. South Korea’s finance ministry lowered its 2013 GDP forecast last month.

“Neighbors including South Korea and China appear to be in some trouble,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “Taiwan yields will probably trade at this relatively low level in the near term.”

The yield on the 0.875 percent bonds due January 2018 fell one basis point to 0.923 percent in Taipei, according to Gretai Securities Market. It touched 0.918 percent earlier, the lowest level since March 8.

Apple Inc. (AAPL) closed 5.5 percent lower yesterday and traded below $400 for the first time since December 2011 after its audio-chip supplier predicted that sales would miss estimates because of unsold inventory. Taiwan’s biggest technology companies, including Hon Hai Precision Industry Co., are suppliers of Apple.

Taiwan’s exports rose 3.3 percent in March from a year earlier, following a 15.8 percent slump the previous month, official data showed on April 8.

Taiwan Dollar

The Taiwan dollar was little changed at NT$29.91, Taipei Forex Inc. prices show. The central bank has sold the Taiwan dollar in the run-up to the close on most days in the past year, according to traders who asked not to be identified.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose two basis points, or 0.02 percentage point, to 3.44 percent. The overnight interbank lending rate was little changed at 0.387 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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