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Chairman Leo Seewald Announces Results of the 2019 Business Climate Survey

AmCham Taipei Chairman Leo Seewald presented the results of the Chamber’s 2019 Business Climate Survey at a news conference followed by a membership luncheon on January 23. More than 30 Taiwan media organizations came to the briefing, which was held at the Chamber’s Lincoln Room.

The online survey was conducted for AmCham by PwC Taiwan between November and December of 2018, with 179 top executives of AmCham’s member companies responding.

Chamber President William Foreman opened the event by explaining the significance of the Business Climate Survey and why the feedback from members is so important to the Chamber. He stressed that a large number of survey respondents are well-experienced, high-level executives from multinationals that are deeply invested in Taiwan for over twenty years. Taiwan’s economic development will reflect the success of multinationals operating in Taiwan.

The Chairman highlighted that the survey respondents were significantly less confident about Taiwan’s economic outlook compared to the previous year. Factors causing concern for global companies include the ongoing U.S.-China trade dispute, the U.S. administration’s “American First” trade policy, pressure on Taiwan from China, and cyber-security threats. On a positive note, most companies are bullish about their own profitability and are confident about revenue growth over the next 12 months to 3 years.

Seewald, who is Chairman/Managing Director of BlackRock Investment Management (Taiwan) Limited, noted three key areas that required the government’s attention:

  • Government regulations and rules-making process: further reforms are needed to meet the needs of a knowledge-based economy. Results indicated modest improvement in satisfaction in regards to Taiwan’s regulatory environment when compared to the previous year. Survey-takers would like to see the government communicating more with businesses when new regulations and policies are passed.
  • Energy: sufficiency of future power supplies. Nearly 90% of businesses are worried about the adequacy of future power supplies; 73% concerned about voltage stability; and 70% concerned about electricity cost.
  • Labor policies: more flexibility is needed to meet companies’ needs. For more than half the companies, labor issues will be a major factor in whether they expand operations in Taiwan. Furthermore, about half the respondents said the latest amendments to Taiwan’s Labor Standards Act did not provide sufficient flexibility in the treatment of professional employees.

The presentation was repeated at a luncheon held at the Sherwood Taipei, which was attended by over 50 AmCham members and guests. See the full presentation below or download the complete report, click here.

2019 Business Climate Survey Presentation from AmCham Taipei

Smooth Flying for the Global Economy

Even if a flight is smooth, airlines generally recommend keeping your seatbelt fastened in case of any unexpected turbulence. The life jacket beneath the seat is strictly in case of dire emergency.

So it goes for investing in today’s global economy, said Tai Hui, managing director and chief market strategist Asia for J.P. Morgan Funds in his recent presentation to AmCham members at a presentation entitled 2018 Global Economic Outlook: End of the Road or More Room to Run?

From left to right: Speaker Tai Hui, Asia Chief Market Strategist, Asia, J.P. Morgan Asset Management; AmCham’s Governor & Asset Management Committee Co-Chair Christine Jih, Chairman & Chief Executive Officer, BNP Paribas Investment Partners Taiwan Co., Ltd.; Eddy Wong, Managing Director, Head of JPMorgan Asset Management Taiwan

“You don’t know when the flight will get bumpy, and the investment world is very similar,” Hui said at AmCham’s Asset Management & Capital Markets Joint Committee luncheon on March 27 at the Grand Hyatt. “We have to put our seatbelts on – we cannot be complacent. You wear a seatbelt by having a diversified portfolio” that spreads out risks of sudden downturns.

The global economy is maintaining its growth momentum, with synchronized growth expected around the world following from 2017’s strong performance. Extending his flight analogy, Hui said that markets were climbing in 2017, but now they’ve reached cruising altitude. “It’s not the time to worry about wearing a life jacket,” he reassured investors worried about the recent trade spat between the United States and China or about U.S. President Trump’s imposition of tariffs on a number of imports, including steel.

The factors that lead him to remain bullish on investments in 2018 are inflation figures that remain at or below targets in markets around the world, even in the United States, despite the economy operating at nearly full capacity. Wage growth remains sluggish in the United States, where union activity is at an all-time low and the rising “gig economy” of Uber drivers, etc., has crimped wage hikes. But nearly full employment will nevertheless lead to creeping inflation, and Hui anticipates the U.S. Federal Reserve raising interest rates to tighten up the money supply and keep inflation within bounds. Although rising interest rates are often a cause for concern for investors, Hui noted that “when the Fed raises rates, it’s a vote of confidence in the economy.”

For the same reason that tighter money supply points to a stronger business climate, he also parted with conventional wisdom that equities take a hit during money tightening. And while equities in the United States are not cheap, he told audience members that equities on Asian markets are earning 30% more per share than their American counterparts, an attractive bargain. Still the 20% boost to revenues that U.S. companies are currently enjoying thanks the to the Trump tax plan likewise makes them viable targets, and investors now have a wealth of choices.

Even fixed-income products such as bonds are doing well, he noted.

Key concerns are the risk of protectionism or even a trade war between the United States and China, but Hui said that recent negotiations between the two economic behemoths should reassure investors that they will likely work things out. A trade war would contribute to inflation on both sides of the Pacific to potentially disastrous results.

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