【The November 2020 results draw】
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The overall TAIFRI score was 98.11, reflecting low risk
In November 2020, the overall TAIFRI result was 98.11, down 0.6 from 98.71 in October, indicating relatively low risk for Taiwan compared to its historical performance. Asset valuation pressure scored 101.63, down 1.77 from 103.4 in October; non-financial sector stability scored 92.9, down 0.7 from 93.6 in October; financial sector stability scored 94.2, down 1.2 from 95.4 in October; and spillovers/contagion scored 104.3, up 0.9 from 103.4 in October
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Commercial real estate remains solid; high volatility in equities market
Analyzing the sub-indices, under asset valuation pressure, the real estate market sub-index has risen continuously since the beginning of the year, reaching a peak in July. The residential part is mainly due to housing prices increasing faster than rents since July, after the pandemic was controlled. However, prices and rents in the commercial office have continued rising steadily this year, indicating that continued attention is warranted on this sub-index. Due to a recent increase in price-to-earnings ratios, the stock market item reached a seven-year high of 20.74 in November. The spread between the market return and 10-year bonds shrunk for three consecutive months, causing an increase in this sub-index. There is a high chance that it will remain high for the rest of the year, but it’s still in a stable range.
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Watch the impact of coronavirus pandemic and year end corporate reports on contagion effect
Stability of the non-financial and financial sectors were both stable. Spillovers and contagion have declined steadily since its high of 113.2 in March, but not as rapidly as before, and in November they rebounded somewhat. The contagion for domestic financial institutions sub-index score was dragged down by an international resurgence in COVID-19. After reaching a peak in April, it fell for five months in a row, but following its rebound, remains higher than in November 2019. Meanwhile, the decline in overseas market risk has slowed after declining for five months following the peak of the pandemic in Taiwan in March. In the fourth quarter, it rebounded due to a second international COVID wave, but slowed down after the United States presidential election. The effects of corporate and banking year-end results merit continued attention.
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