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Export orders are significantly better than they were last month. No matter how bad on an absolute basis, better than toxic matters.

Taiwan has felt the pressure of contracting global demand for consumer technology products acutely, with declining orders driving unemployment levels to 5.75% (an all time high for the island republic), and February export orders data was released today by the Ministry for Economic Affairs, showing the 5th consecutive year-over-year decline.

At -22.7% Y/Y, Export orders came in over 5% better than the median market forecast and showed a 13.81% improvement over January’s numbers. Meanwhile, Industrial Output also showed signs of relative improvement, arriving at -27.14% Y/Y, up 8.32% from January on a monthly basis. Significantly, the impact of Lunar New year, which fell in January this year, accounts for a large portion – though not all, of the relative improvement.

Although a bottoming in the Taiwanese economy will be a process, the evidence that Panda Diplomacy is starting to thaw trade relations with the mainland continues to be a secular positive. Meanwhile, signs that the bullish TREND in semiconductor demand (that our Tech group identified six weeks ago) is helping to slow the rate of export contraction in that critical Tech sector. These are steps in the right direction. Don’t forget, everything that matters in our macro models happens on the margin.

Central Bank Governor Perng Fai-nan will lead a board meeting on Thursday to discuss cutting rates below the present 1.25%, but it’s doubtful that any resulting uptick in domestic consumption arising from lower interest rates could move the needle significantly. We will remain focused on Taiwan and its etf, the EWT, looking for any signs that external demand may be starting to find its feet.

Andrew Barber