Leaving on a jet plane

 - --- All my bags are packed and I'm ready to go,

       I'm standing here outside your door.

       I hate to wake you up to say goodbye.

      But the dawn is breaking, It's early morning.

      The taxi is waiting, he is blowing his horn,
      Already I'm so lonesome.

      So kiss me and smile for me, tell me that you'll wait for me.

      Hold me like you'll never let me go,
      Cause I'm leaving on a jet plane.

      Don't know if I'll be back again, oh babe I hate to go. ----

                  Quoted from lyrics of song – Leaving on a jet plane

                  Written and performed by John Denver

I am not leaving my blog, though. I still want to practice writing in English.

Taiwan Airliners – Phoenix Flying out of Ashes

Patience was finally rewarded toward Taiwan airliners whose rehab efforts paid off significantly last year, in which a record high of nearly 30 mn people traveled to or from Taiwan, 19.5% more than in 2009.

In terms of tourism trip, about 57% of the 9.42 mn outbound trips by Taiwan citizens started with travel to China in 2010, while 14.6% went to Japan. Total tourists visiting the island hovered to 4 mn in 2009, jumping to 5.57 mn in 2010, and hoping to top 6.5 mn this year. It is worth a notice that Chinese tourist arrivals mushroomed rapidly since both sides inked a tourism agreement in July 2008. Last year , 1.63 mn Chinese tourists flew to Taiwan, up an annual clip of 68%. Taiwan has boosted daily quota for incoming Chinese tourists to 4,000 persons from 3,000, and may raise it to 5,000. An upcoming greenlight to allow individual Chinese to travel around the island will add boon to the airline industry.

The increased air traffic enabled two major int'l airliners based in Taiwan, China Airlines (CAL) and EVA Airways, to perform like a phoenix rising out of ashes last year, in which CAL registered NT$138 bn in sales, up 40% YoY, and EVA posted NT$104 bn, up 42%. Their margins in net profit, ROA and ROE as a whole bounced back to the black as of Sep. 2010. Under the breakdowns, CAL raked in 10.20%, 2.01%, 7.57% gains: while EVA, 20.39%, 4.12%, 14.33%. Their respective EPS took off for the banner 2010, as CAL hauled in NTD3.01 versus a yearly loss of NTD1.04 in 2009; and EVA, NTD4.82 from a loss of NTD1.14. The results were deemed heady, especially after together suffering red inks from 2007 to 2009 in a row.

At present, there are 370 direct flights per week across Taiwan Straits, a number said to be far shy of demand. Additional destinations to China cities will be inaugurated to capitalize on the bumper cross-strait tourism, in a hopefully blistering pace to stave off the headwinds the two airliners will likely run into in 2011–firmer fuel prices and relatively higher comparable bases in earnings.

As much as 2 mn Taiwanese currently have presence there, and of course will return to the island but mostly for festival holidays. To flee the island aiming for bonanza in China will speed up, affected by the already-effective ECFA and the Free Trade Agreement between China and SE Asian countries. With this tariffs advantage, relocation idea and attempt to tap coastal, or hinterland China markets have been unanimous by Taiwan makers of all stripes apparently rushing to jump on the bandwagon. More business trips will benefit the aviation operators in the long haul, making them deserve a status to head the watch list for “buy on dips”, though a problem of capacity shortage remains.

Inflation – Elephant in The Room ?

The specter of import-driven inflation has spooked Taiwanese, as 70% of their consumption is supported by imports. Global food crisis and spiraling commodity prices were blamed for a proposed 8% hike by state-run Taiwan Sugar for its own-brand lineups’ price tags. The move, reportedly forced to be taken begrudgingly earlier but waived afterwards, is much expected to ignite a land mine, bringing about an unavoidable across-the-board  price pickup in fuel and foodstuff.

The government initially responded with a muted note, overlooking that as an elephant in the room, given the fact that the CPI growth rate in Jan. perched at its comfort zone below 2%, sliding 0.01% MoM and climbing 1.11% YoY. Government also urged end-users to coordinate to ward off the inflation woes, wording it had worked to counterattack by whittling down the import tariffs for wheat, flour and milk products for a 6-month period. Further, a withering USD was witnessed to be welcomed to warrant a weakening import cost.

News came as a surprise on late Thursday night that waves of criticism pressed the cash-rich sugar producer, which stashed NTD12.7 bn profit on its bottom line last year, to scrub the plan. The shift of policy earned it an applause. However, a whiff of fresh inflation momentum has been  spread islandwide, following words from another profitable state-run enterprise, China Petroleum, not to freeze its fuel prices. Food makers and bakeries have found it difficult to pass along rising cost when needed to retain their shoppers. In some cases, a mildly growing inflation means an economy is out of the woods, as funding demand is pushed higher. But the phenomenon is not arriving at Taiwan door at the moment yet.

The government still mulls a payroll hike for public servants who might think the inflation worry is simply a small fly on the ointment. Generally speaking, the widening inflation pressure will whack the most the well-being of the financially-squeezed, debt-ridden underprivileged, and the employed who failed to get a lift in wage these few years. Taiwan can not shun worldwide mounting inflation alone, but to probe importers’ illegal hoarding of commodity is necessary. Plus, a stipulated rule requiring state firms in existence to stabilize retail prices must be fully carried out. Said by people: "There is no time like the present living condition worsening by a sweeping outburst in the inflation of entire supply chian, except wage."

Even worse, people are situated to meet a creeping-up of new premium rate by Taiwan National Insurance Pension Fund, which covers those not insured by major national benefit, security systems, from 6.5% to 7% applying from Apr. 1, 2011. The total premium will ascend by NTD4 bn, sourcing from 3.9 mn people who are vulnerable to inflation spike. The increase, so to speak, is designed to help wipe out deficit of national coffers partially. Outstanding national 12-month-plus debt rocketed sharply in Jan. to NTD4,578 bn, up by a whopper NTD105 bn from last Dec. and marking averaged debt burden of NTD208,000 per capita. Currently, a number of 3.6 mn Taiwanese whose monthly income stands below NTD30,000. Among them 1 mn received less than NTD20,000 each month, a threshold for barely getting their heads above water.

The net number of new plants reached 342 in 2010, a turnaround from the declined number of plants by 1,316 in 2009 and 489 in 2008. It is good news anyway. But, when local business activities resumed on Feb. 07 after lunar new year holidays, filings for job searching with an on-line site vaulted tenfold to 80,000 cases from an prior averaged daily level. The most available vacancy positions were seen in non-tech sectors - catering services and marketing. The reported pile-ups coincided with official upbeat release that domestic job chances far eclipsed demand. As a race to look for a job heated up, things are  certain that Taiwan fertility rate landed into a record low last year along with a whimper among the poor already.

Taiwan Stock Market – Bears on The Prowl

Taiwan stock market headed for a stumbling start after reopening Tuesday, whipsawed by a drastic selling frenzy. Optimism waned so unexpectedly, in a sharp contrast to pre-holidays, broad-based wish for anther winning streak to revisit the widely-watched 10,000 mark. Steep downdrafts by bellwethers both in electronics, fret over profit erosion by stronger local currency, and over-heated financials, sent investors packing. The extent of the downturn was in part accentuated by eagerness of local brokerage houses to execute sell orders placed for hedging actions against still-floating options. Foreigners hustled for the exits by dumping a net NTD42 bn these past four sessions. Local institutional traders also jumped the ships to wind up last week's wild trading at 8,609 points.

A short-lived technical rebound is due next week, only to form a distribution pattern around the 8,400 level. Trading will be light, so any data surprises, including a rerun of exodus by foreigners, could provide wider swings as bears seem to have retaken the dominance. Just say good-bye to the 10,000 points that may be reclaimed someday, if economic conditions warrant. Believing by government the glass is half-full and 2-year-long rally is bona fide is fine, but a possibly-downbeat bias in private spending and living cost make it a different story. The shockwave triggered by a weekly 536-point free-fall will have folks waver, wondering when bulls will wake up from their hibernations and which way the wind will blow in near future, both fundamentally and technically.

All on Board !

Here is what captains are speaking – "Welcome on boards of CAL and EVA airlines for destinations to China cities, and please fasten seat belts as turbulence will occur in the sky over the island that might encounter ballooning Taiwan makers' departures and volatility in stock market.”

If you are leaving on a jet plane for a flight away from Taiwan, please book the tickets of CAL and EVA to keep their fortunes afloat. In future, we should calmly wait for a return of the masses seemingly unwilling to depart earlier amid a lemming rather than crowded-out effect. They hated to go away from sweet homes for a lonesome journey, as I think. Truly to say, few will part with this beautiful island for a long while, will you? 

Good luck, and have a nice trip on vacations!