Spokesperson: Liu, Li-Ju, Deputy Director General
The world is ever-changing in terms of international politics and economic situation since the beginning of 2016. The complexity is greater for Bureau of Labor Funds to manage the funds under more volatile financial markets globally due to many factors, such as the Brexit, U.S. Presidential Election, Fed’s rate hike, slowdown in EU’s economy, China’s economy restructuring, higher turnover among emerging markets and volatility of commodity price. We expect the global economy will be influenced by these factors and still more fluctuating in 2017.
According to the forecasts by IMF and Global Insight, the global economy will recover at a slow pace. By these two institutions, the growth rate of global economy in 2016 and 2017 will be 3.1％, 3.4％ and 2.4％, 2.8％, respectively. In general, the prediction of growth rate in 2017 is higher than 2016 by mainstream forecasters.
Regarding the outlook in 2017, the monetary policies of major countries could be diverse. The Fed is expected to raise interest rate gradually but the other state(s), UK, Japan, China and EU, may hold the QE monetary policy for some time. On the other hand, the global stock market could keep swing heavily due to the impact from Trump’s policy and the upcoming country-leader elections in France and Germany next year. Furthermore, the global economy and financial system will be affected by the outcome of China’s economy restructuring and oil reduction by oil-producer countries.
Taiwan’s economic growth rate has turned to positive based on stabilized commodity price in global markets and export recovery from foreign demand. The economy is recovering mildly in light of the green light of Monitoring Indicators and the continual uptrend of Leading Indicators and Coincident Indicators. Coupling with global recovery in the future, Taiwan’s export could gain stronger momentum following the leading position of semiconductor industry with advanced manufacturing process, innovation of mobile devices and emerging demand for new application. The stock market in Taiwan is supported by fundamental aspect and also attractive in terms of higher yield. However, the level of volatility could be increased by the uncertain factors such as the acceleration of global protectionism, flight to dollar-denominated assets and so on.
In view of environment with lower yield and higher volatility and ongoing growth of Labor Funds, the BLF continually keeps strengthening the diversified strategy globally in order to improve the investment performance and diversify the investment risks effectively in 2017. We plan to increase the position of domestic investment as usual. For foreign investment, we have announced the “Global ESG Quality Mix Equity Indexation Mandate” to fulfill the social responsibility as an investor in the global investment community. For the purpose of managing downside risk, we have released the “Absolute Return Fixed Income Mandate” in respond to the environment with rising interest rate and volatility.
Facing the growing uncertainty in global financial market, the BLF insist with the strategy of diversified investment and steady asset allocation not only to pursue stable returns but also to take more social responsibility. In the future, the BLF will still be engaging in diversified asset allocation and strategic index investment. We will keep observing global financial situation and adjust the portfolios accordingly by the trend of markets which lead to the goal of reducing risk and obtaining steady returns for Labor Funds in the long run.