Taiwan's exports extended their double-digit decline for the fourth consecutive month, falling by 14.6% (Aug: -14.8%; Jul: -12.0%), is below expectations. The persistent trade recession brings the YTD exports down 9.5% y/y compared to the same period last year.
Shipments to China, in particular, plunged 20.5% y/y in September (Aug: -17.6%), as the traditional frontloading of shipments before China's Golden week failed to materialise.
Barclays notes, this was accentuated by the following factors:
- 1) freight disruptions and one less working day due to Typhoon "Dujuan" in late September.
- 2) much slower inventory adjustment in electronics.
- 3) depressed commodity prices in oil and steel.
On a seasonally adjusted m/m basis, exports contracted by 2.3%, extending the 0.6% m/m drop in August (Q3: -2.6% q/q; Q2: -4.8%). Even after excluding the distortions from oil-related products, the fall in exports was still a sizeable 11.3% y/y, as electronics shipments have been soft as well.
Indeed, TSMC Chairman Morris Chang pointed out that inventory correction may extend into Q4 this year, depressing purchasing activity and production. This could partly offset the lift from the launch of iPhone 6s as well as higher demand amid the pre-Christmas stocking period.
