Taiwan Bonds Rise on Asian Growth Concern; Local Dollar Gains

Taiwan’s government bonds advanced as investors sought the relative safety of fixed-income securities on concern Asian nations are struggling to boost economic growth. The local dollar was little changed.

The Taiex Index of shares extended last week’s decline, when global funds sold $543 million more local stocks than they bought, exchange data compiled by Bloomberg show. Gross domestic product growth in China, Taiwan’s biggest overseas market, unexpectedly eased in the first quarter as factory output weakened, a sign the nation’s recovery from the slowest expansion in 13 years has lost momentum.

“Economic data continues to paint a picture of a relatively weak recovery for Asia,” said Samson Tu, a Taipei-based fund manager at Uni-President Assets Management Corp., which oversees $700 million. “Looks like China’s rebound is going to be slow as expected.”

The yield on the 0.875 percent notes due January 2018 dropped one basis point, or 0.01 percentage point, to 0.964 percent in Taipei, according to Gretai Securities Market.

The Taiwan dollar rose 0.2 percent to NT$29.927 against its U.S. counterpart, Taipei Forex Inc. prices show. The central bank has sold the local dollar in the run-up to the close on most days in the past year, according to traders who asked not to be identified.

Forwards, Volatility

One-month non-deliverable forwards climbed 0.2 percent to NT$29.88, data compiled by Bloomberg show. The contracts touched NT$30.10 on April 9, the lowest level since July 27. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 26 basis points to 3.63 percent.

The overnight interbank lending rate was little changed at 0.385 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

China’s first-quarter GDP rose 7.7 percent from a year earlier, the National Bureau of Statistics said in Beijing today. That compares with the 8 percent median forecast in a Bloomberg News survey of 41 analysts and 7.9 percent in the fourth quarter. March industrial production gained less than estimated while retail-sales growth matched forecasts.

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