Taiwan Dollar Set for Best Weekly Gain Since 2011 on Inflows

Taiwan’s dollar was poised for its biggest weekly jump since 2011 as inflows surged amid speculation over an equity link with Shanghai.

Overseas funds pumped $1.4 billion into local shares this week as the benchmark index surged past 10,000 for the first time in 15 years. The vice chairman of China’s securities regulator said on April 22 it was studying a link between the Shanghai and Taipei exchanges, the Economic Daily News reported, while Taiwan’s ruling party Kuomintang confirmed a May 4 meeting between its chairman Eric Chu and Chinese President Xi Jinping. Shanghai’s stocks have jumped 81 percent and Hong Kong’s 18 percent since a link between the two bourses started in November.

“Taiwan’s stocks were boosted by speculation over cross-strait issues,” said Woods Chen, an economist at Ta Chong Bank Ltd. in Taipei. “The surge in the Chinese equity markets and the start of the Shanghai-Hong Kong Stock Connect have made people think about the possibility of a Shanghai-Taipei Stock Connect.”

Taiwan’s dollar jumped 1.7 percent this week, the most since January 2011, and 0.5 percent on Thursday to NT$30.529 against the greenback as of 10:16 a.m. local time, Taipei Forex Inc. prices show. This marks the currency’s seventh weekly rise. Markets in Taiwan will close tomorrow to mark the Labor Day holiday.

Hong Kong’s Hang Seng Index gained from the trading link with Shanghai as Chinese investors piled in to take advantage of dual-listed firms’ discount in Hong Kong. The Hang Seng China Enterprises Index, which tracks shares of mainland companies listed in Hong Kong, has advanced about 17 percent this month.

Taiwan’s Financial Supervisory Commission Minister Tseng Ming-chung said last week a stock link with China isn’t currently in the works.

Growth Accelerates

The local economy grew 3.46 percent in the first quarter from a year earlier, compared with the 3.5 percent median estimate in a Bloomberg survey of analysts and 3.35 percent in the prior period. Exports shrank as cheaper oil curbed related shipments such as petrochemicals, while capital expenditures also fell. Still, growth in electronics exports as well as private consumption buoyed the economy.

Government bonds fell in April, with the yield on notes due March 2020 rising three basis points, or 0.03 percentage point, to 1.02 percent, Taipei Exchange prices show.

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