OREANDA-NEWS. June 30, 2015. Taiwan chief financial officers (CFOs) are among Asia’s most optimistic, with 93 percent forecasting profits to rise in 2015, according to the Bank of America Merrill Lynch CFO Outlook Asia survey. The positive sentiment is being driven by the stabilization of economic growth, high consumer sentiment, and benign market risks.

The survey shows profitability expectations of Taiwan CFOs posted a 33-percentage point increase from the 60 percent recorded in 2014. Both the absolute percentage and the rate of growth were the second-highest of the 12 markets surveyed. Across the region, 73 percent of CFOs expect profit growth in 2015.

“With stabilization in the overall economy on the back of stronger consumer sentiment, the profit outlook for Taiwan corporations has improved considerably,” said Wayne Liaw, head of Corporate Banking, Taiwan. “They are now reaping the benefits of the efficiency initiatives and prudent financial management of the past several years, when growth was more sluggish. Business confidence is also being aided by the stable policy environment.”

Conditions in the domestic market remain supportive, according to respondents. Only 20 percent of Taiwan CFOs cited slowing home market growth as their greatest macroeconomic concern, the lowest among 12 markets surveyed, and significantly lower than both the 2014 figure (37 percent) and the regional average (37 percent).

While the vast majority is bullish on profit growth in 2015, risks to that growth remain. Eighty-three percent of Taiwan CFOs cite political risks as a concern going forward, easily one of the highest rates in the region. As such, CFOs in Taiwan as a group are adopting some conservative measures to protect themselves.

In 2015, Taiwan CFOs are bolstering their balance sheets and are among Asia’s most active in strengthening cash reserves. Eighty percent of Taiwan CFOs said they are planning to retain surplus cash. In 2014, only 13 percent of Taiwan CFOs were planning to build cash reserves.

Given this, the appetite for acquisitions is the lowest in the region. The percentage of Taiwan CFOs looking to use surplus cash for acquisitions dropped to 17 percent in 2015 from 33 percent in 2014. Furthermore, only 10 percent of responding Taiwan CFOs will use financing for acquisition purposes, below the regional average of 26 percent.

Other key findings include:

  • Changing exposures: The survey also found that CFOs in Taiwan have significantly increased their exposure to the Japanese yen and U.S. dollar in 2015. Fifty percent of Taiwan CFOs said they have exposure to the yen, compared to 7 percent in 2014. Forty-three percent said they have significant exposure to the U.S. dollar, compared to 10 percent in 2014. However, according to CFOs, approximately half of these exposures to either the yen or U.S. dollar are hedged.
  • U.S. rates malaise: Taiwan CFOs are unconcerned about potential U.S. interest rate moves. Only 13 percent believe that higher rates will negatively impact their businesses, the region’s third-lowest, while 17 percent believe that rising U.S. interest rates will cause major problems for Asia.
  • China remains attractive: Although acquisition activity will be low, Taiwan CFOs are investing more in China. Sixty percent have plans to further invest in China production and operations despite concerns of a moderating economy and the impact of policy changes on the mainland. Conversely, further loosening of China renminbi (RMB) capital controls would benefit Taiwan businesses according to 80 percent of CFOs, highlighting the longer-term attractiveness of this market.


“In our interactions, Taiwan corporations are generally sanguine about the current macroeconomic environment and its potential to impact on business. But as this survey confirms, the role of the CFO goes beyond financial forecasting and management to encompass broader strategic planning,” said Liaw.

The Bank of America Merrill Lynch 2015 CFO Outlook Asia survey includes the views of 630 respondents at the CFO or CFO-equivalent level within finance departments. Now in its fourth edition, the survey offers insights into the strategies deployed by key financial decision makers across multiple industries and 12 economies in the region. Approximately 97 percent of respondents come from corporations with at least US\\$500 million annual turnover and represent a mix of multinational corporations and large local companies.

To download the Bank of America Merrill Lynch 2015 CFO Outlook Asia survey, please click here.

Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 48 million consumer and small business relationships with approximately 4,800 retail financial centers and approximately 15,900 ATMs and award-winning online banking with 31 million active users and approximately 17 million mobile users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated, which is a registered broker-dealer and a member of FINRA and SIPC, and, in other jurisdictions, locally registered entities. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed.