At Any Rate
TWD / Asian FX gains and equity implications
May 9, 2025
Jemmy Huang, a senior coverage analyst focused on Taiwan's financial sector, teams up with Mixo Das, an Asia equity and quant strategist, to dissect the recent 6% drop in the Taiwan dollar and its impact on regional markets. They explore Taiwan's life insurers' FX strategies amid currency volatility and the implications for equity prices in tech sectors. The duo examines cautious investor sentiments post-DeepSeek and compares Taiwan's and Korea’s equity resilience, while offering insights into emerging markets and the changing dynamics of APAC bonds.
26:54
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Quick takeaways
- The significant appreciation of the Taiwan dollar has led to sharp declines in earnings expectations for Taiwan's tech and financial sectors reliant on overseas revenues.
- Amid currency volatility, Taiwanese insurance companies face risks from unhedged overseas investments, prompting a cautious approach to market conditions and bond holdings.
Deep dives
Market Shock and Currency Movement
A recent significant drop in the dollar Taiwan exchange rate caused widespread shock across Asian FX markets, leading to a reported 6% loss in one day. This unprecedented volatility also impacted other currencies, including a 5% reduction in dollar Korea and notable gains in currencies like the Malaysian ringgit and Singapore dollar. Following the initial turmoil, the strength in Asian currencies contributed to disinflationary pressures, resulting in declining bond yields. Investors remain puzzled by the abrupt changes, as there is a lack of credible explanations for the events surrounding the currency fluctuations.
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