The global financial markets have seen violent fluctuations since the start of the year. In response to the volatilities, the Labor Funds dynamically and prudently adjusted their global positioning, and as of the end of June, the Funds were valued at NT$3.1921 trillion, with an income of NT$61.2 billion and a rate of return of 2.03%.
The Bureau of Labor Funds noted that the global economic recovery in the first half of the year had been weaker than expected, and global investment and trade had remained sluggish. Despite the loose monetary policies adopted by many countries, the global financial markets are still seeing violent ups and downs owing to the slowing Chinese economy, fluctuating oil prices, uncertainty over the US rate-hike schedule, and the Brexit. The year-to-date returns of MSCI World, MSCI AC Asia-Pacific, and MSCI Emerging Market indices and the Taiwan Stock Exchange Weighted Index are 1.23%, 2.36%, 5.69% and 3.94%, respectively.
The overall asset under management of the Labor Funds is NTD3.1921 trillion by June, 2016, including 1.5924 trillion of the Labor Pension Fund, 785.8 billion of the Labor Retirement Fund, 685.0 billion of the Labor Insurance Fund, 106.9 billion of the Employment Insurance Fund, 10.6 billion of the Occupation Incidents Protection Fund and 11.4 billion of the Arrear Wage Payment Fund. The Labor Funds dynamically and prudently adjusted their global positioning, and as of the end of June, the overall Labor Funds earned 61.2 billion after marked to market. The rate of return of the Labor Pension Fund, the Labor Retirement Fund, the Labor Insurance Fund, the Employment Insurance Fund, the Occupation Incidents Protection Fund and the Arrear Wage Payment Fund were 2.02%, 1.86%, 2.52%, 0.45%, 0.46% and 1.09% respectively. Besides, the Bureau of Labor Funds has also been commissioned by the Ministry of Health and Welfare to manage the National Pension Insurance Fund (NPI). By the end of June this year, the scale of the NPI reached 239.6 billion. The earning was 5.36 billion after marked to market. The rate of return was 2.37%.
The Bureau of Labor Funds said in a Eurozone annual policy evaluation report issued by the International Monetary Fund (IMF) on July 8, the IMF revised downwards its forecasts for the Eurozone’s economic growth this year and next from 1.7% to 1.6% and 1.4%, respectively. The IMF also pointed out that the political and economic uncertainties created by the Brexit, a surge in refugee numbers, heightened security concerns, and banking sector weaknesses could all have an impact on the Eurozone’s growth. In the US, the latest Federal Reserve meeting minutes indicated that the monetary policy would stay on hold as a result of a significant slowdown in hiring, continued sluggishness in business fixed investment, and concerns over possible fallout from the Brexit vote. The Fed also said it would need more economic data before introducing any adjustments to its monetary policy. In Taiwan, the Ministry of Finance announced that exports in June fell for the 17th month in a row, decreasing by 2.1% year-on-year. However, the decline of 2.1% was less than the 9.6% fall seen in May, and it is expected that growth in exports will return to positive territory in the third quarter at the earliest.
After the Brexit vote, the UK will open lengthy negotiations with EU countries. Elsewhere, the US presidential election later this year, the Fed’s monetary policy, and geopolitical tensions will create uncertainties that will continue to disrupt the global financial markets. The Bureau of Labor Funds will keep monitoring developments in financial markets around the world, while focusing on investment risk controls, flexible adjustments, and diversification of investment strategies in order to create long-term steady income for the Labor Funds and the National Pension Insurance Fund and enhance the economic security and post-retirement protection of our citizens.