November 20, 2018 / 9:25 AM / 20 days ago

UPDATE 1-Taiwan Oct export orders beat growth forecast, but slowing seen ahead

* Oct orders +5.1 pct y/y, vs +4.4 pct poll forecast

* Orders from U.S. +8.2 pct y/y; China +5.9 pct

* But analysts say Nov, Dec orders may show slowdown

* Ministry sees Nov volume in range of -0.6 pct y/y to +1.4 pct

By Roger Tung and Jess Macy Yu

TAIPEI, Nov 20 (Reuters) - Taiwan’s export orders expanded more than expected in October, in spite of the United States-China trade war and worries about demand for electronic gadgets as the year-end holiday season gets under way.

Orders for trade-reliant Taiwan rose 5.1 percent in October from a year earlier to US$48.99 billion, a record for any month, Ministry of Economic Affairs data showed on Tuesday. A Reuters poll had forecast 4.4 percent growth.

Taiwan’s orders are a leading indicator of demand for Asia’s exports and for hi-tech gadgets, and typically lead actual exports by two to three months.

October’s better-than-expected number was announced on a day Asian stock markets fell, following sharp losses on Wall Street with technology firms bearing the brunt of concerns about slackening demand for Apple Inc’s smartphones.

Last month’s orders from the United States increased 8.2 percent from a year earlier, compared with September’s 3.7 percent.

Those from China increased 5.9 percent, compared with 1.3 percent the previous month. Orders from the European Union rose 0.9 percent, a sharp fall from September’s 13 percent, and from Japan dropped 1.1 percent.

The ministry said October’s record total stemmed from new product launches including wearable devices.

But it said November’s orders could show a range from a shrinkage of 0.6 percent from a year earlier, up through to a gain of up to 1.4 percent.

Analysts also warned of a slowdown for Taiwan suppliers.

It’s now peak season for electronics, said DBS economist Ma Tieying, but she says “some kind of slowdown” in electronics and overall export orders could be seen in November and December.

BATTERED SHARE-PRICES

Traditionally, demand for tech gadgets picks up during the Christmas and end-of-the-year shopping season, for which companies such as Apple make big purchases of components.

Shares of Taiwan tech firms, like those of U.S. ones, have been battered by worries of slowing demand. Giant Foxconn, formally known as Hon Hai Precision Industry Co Ltd, has seen its share-price drop 18 percent in October and 9.9 percent so far in November.

The U.S.-China trade war has so far spared iPhones from tariffs but computer server and networking gear parts that are used to power “cloud” data centres and internet-based services have been included in the levies, as are some parts for the machines used to make semiconductors.

But DBS’s Ma warned that the trade war could start showing a “more notable impact” on iPhone suppliers and Taiwan suppliers come January, when tariffs are scheduled to be higher.

“Suppliers know tariffs will be higher by January because the U.S. will launch higher tariffs from 10 percent to 25 percent on some goods. This mean for shipments before January exporters can still enjoy relatively lower tariff rates,” she said.

In September, Taiwan’s central bank revised its 2018 economic growth forecast to 2.73 percent from June’s 2.68 percent. It forecast 2.48 percent expansion in 2019. ($1 = 30.9070 Taiwan dollars) (Reporting by Roger Tung; Additional reporting by Jess Macy Yu and Jeanny Kao; Editing by Richard Borsuk)

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