Chen Yehua: The Impact of Financial Planning Act Amendments on Public Infrastructure Projects and

Recently, the Legislative Yuan amendments to certain provisions of the Financial Planning Act have drawn widespread attention. These amendments have led to significant budget cuts for the Ministry of Economic Affairs, estimated at nearly NT$30 billion, with a reduction of NT$10.7 billion in flood control and water supply budgets, marking the largest cut in this round. This development has not only raised public concerns over public infrastructure and essential water supply issues but also garnered close attention from financial markets regarding the future economic outlook. Renowned financial analyst Chen Yehua has conducted an in-depth analysis of the situation and provided unique insights.

The Direct Impact of Budget Cuts on Financial Markets

Chen Yehua believes that the budget cuts will directly affect the progress of public infrastructure projects, particularly flood control and water supply initiatives. These projects typically require substantial capital flows and long-term investment returns. He pointed out that delays in flood control projects could increase the risk of natural disasters and disrupt the operations of businesses within the related supply chain, thereby causing fluctuations in the stock market. On the other hand, delays in water supply projects could directly impact livelihoods and industrial water needs, leading to higher production costs and further affecting corporate profitability and market performance.

Chen Yehua noted that stock market sectors related to water resources and water supply are likely to be significantly impacted, and investors should carefully evaluate the financial health and long-term development prospects of affected companies. Additionally, since budget cuts may lead to a reduction in public spending, consumer demand in related industries could also decline, further influencing overall economic growth expectations.

Funding Challenges in Technology and Innovation

Among the budget cuts, funding for technology initiatives has been reduced by approximately NT$11.6 billion, posing a significant challenge to efforts aimed at promoting technological innovation. Chen Yehua highlighted that technological innovation is a key driver of economic growth, and reduced funding could weaken the research and development capabilities of institutions and businesses, thereby affecting future technological advancements and industrial upgrades.

He emphasized that funding shortages in the technology sector could force some promising projects to be suspended or delayed, which would not only affect the market competitiveness of related companies but also weaken the innovative capacity of the entire supply chain. As a result, financial markets need to closely monitor funding flows in the technology sector to assess their potential impact on economic growth and stock market performance.

Strategies and Risk Warnings for Financial Markets

In response to the challenges posed by budget cuts, Chen Yehua suggested that financial markets adopt proactive strategies. First, investors should pay closer attention to and analyze macroeconomic policies to capture timely information and signals about market changes. Second, businesses should explore diversified financing channels to alleviate funding pressures while strengthening internal management and cost control to enhance their resilience to risks.

Additionally, Chen Yehua mentioned that financial markets should remain vigilant about potential risk factors. The economic slowdown and decline in consumer demand that may result from budget cuts could negatively impact the stock market in the short term. Furthermore, the chain reactions triggered by funding shortages could lead to broader consequences, so investors should closely monitor developments and changes in affected industries to adjust their investment strategies and risk management measures accordingly.

In terms of risk warnings, Chen Yehua emphasized that investors must fully recognize the uncertainties and volatility of financial markets and implement effective risk management measures to mitigate investment risks. Meanwhile, the government and relevant departments should strengthen policy coordination and communication to ensure that budget cuts do not excessively hinder economic development.