Money supply may see ‘golden cross’ in April
The annual growth of Taiwan’s two major money supply indicators-M2 and M1B-stood at 6.39% and 5.44%, respectively in March, and the gap between the two narrowed to less than one percentage point, very likely to form a “golden cross” in April when the growth of the latter may exceed that of the former, according to the central bank.
The “golden cross” shows passbook deposits exceeding the total capital supply in the financial market, with the idle funds flowing to the stock market drive rallies. The last “golden cross” appeared about two years ago in February 2007.
Many consumers plan to transfer their term deposits to savings accounts since the interest rates differ by a merely 0.5 of a percentage point. The money in savings accounts is believed often invested in the stock market for better returns despite higher risk.
The table below shows that as of March the outstanding passbook deposits hit a new high of NT$8 trillion (US$242.42 billion at US$1 = NT$33), ballooning by more than NT$600 billion (US$18.18 billion) from the corresponding figure recorded at the end of last year.
In March the passbook deposits posted a monthly rise of NT$330.1 billion (US$10 billion), with average daily increase of NT$11 billion (US$333.33 million), equaling 10% of the daily transaction value in the stock market here.
In the same month the outstanding value in securities trading accounts rose NT$118.3 billion (US$3.59 billion) from a month earlier to NT$892.7 billion (US$27.05 billion), the highest of its kind in 10 months; while the outstanding margin loans reached NT$167.1 billion (US$5.064 billion), rising by NT$30 billion (US$909.09 million) from that recorded at the end of 2008.
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