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Taiwan Bonds Decline for a Fourth Day on Plan to Boost Equities

November 26, 2012

Taiwan’s bonds dropped for a fourth day, with benchmark 10-year yields rising to the highest in three weeks, and the local dollar rose after the government said it will consider measures to bolster the stock market.

Premier Sean Chen has asked Minister Without Portfolio Kuan Chung-ming to study steps to boost the Taiex index, Cabinet spokeswoman Cheng Li-wun said on Nov. 23. U.S. shoppers spent 13 percent more during the four-day Thanksgiving weekend from a year earlier, the National Retail Federation said, signaling an improvement in the world’s largest economy.

“If stocks continue to rally because of the government’s support, some investors may pull money out of bonds,” said Albert Lee, a fixed-income trader in Taipei at Cathay United Bank Co. “Insurers, who are among the big players, may go into stocks.”

The yield on the 1.125 percent notes due September 2022 rose one basis point to 1.141 percent, according to Gretai Securities Market. That’s the highest level for benchmark 10- year yield since Nov. 6.

Taiwan’s dollar appreciated 0.1 percent to NT$29.143 against its U.S. counterpart, based on Taipei Forex Inc. prices. The currency touched NT$28.959 on Nov. 12, the strongest level since September 2011. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 20 basis points, or 0.2 percentage point, to 3.5 percent.

Global funds bought $434 million more Taiwanese stocks than they sold on Nov. 23, the biggest net purchase since Sept. 14, and added $263 million to holdings today, according to exchange data.

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

To contact the reporter on this story: Andrea Wong in Taipei at

To contact the editor responsible for this story: James Regan at

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