Taiwan's Stock Market Boom Boosts Financial Sector, Service Industry Business Climate Hits Nearly Two-Year High

The Taiwan Institute of Economic Research (TIER) released its business climate index for June on the 24th. The manufacturing sector index stood at 98.39 points, down 1.14 points from the previous month, ending a two-month consecutive rise. In contrast, the service sector index rose 0.66 points to 100.12 points, marking the fourth consecutive monthly increase and the highest level since August 2023.

TIER reported that among manufacturers, the proportion of firms rating current (June) economic conditions as 'good' was 18.9%, down 11.5 percentage points from the previous month. Those rating conditions as 'bad' rose to 24.0%, up 0.4 percentage points. Looking ahead to the next six months, the share of manufacturers with optimistic outlooks decreased slightly by 0.1 percentage points to 28.5%, while pessimistic views increased by 0.2 percentage points to 14.8%. Most manufacturers adopted a neutral stance, though overall optimism still outweighed pessimism.

TIER noted that while AI-related applications continue to expand, driving demand for computing power and supply chain momentum, traditional industries continue to face structural challenges such as weak global demand, intensified price competition from China, resource crowding-out effects, and transformation pressures.

For the service sector, the improvement was primarily driven by strengthened operational momentum in banking, securities, and insurance industries. Financial institutions showed significantly higher optimism than pessimism regarding current economic conditions.

Specifically, financial institutions benefited from stronger loan demand, active stock market trading, and growing wealth management business, leading to increased net interest margins, investment gains, and fee income for banks. The securities industry saw improved brokerage performance due to rising Taiwan stock prices, expanded trading volumes, and increased investor participation. The insurance sector maintained stable operations, supported by simultaneous growth in life insurance new contract premiums, property and casualty insurance written premiums, and investment returns.