Last year will be cited as a good year for the stock markets of the world. Singapore's market rose by 21.64 percent, South Korea's by 27.25 percent, Indonesia's by 33.85 percent, the Philippines' by 25.06 percent and even Japan's lethargic market rose by 14.98 percent. Taiwan's stock market, however, only rose by 4.23 percent.
The Taiwanese always have high hopes for the stock market's performance in January, but it has been very disappointing thus far. In the first week of this year, the TAIEX fell by 3.3 percent.
Although declines are often attributed to a falling US stock market, indexes in Japan and South Korea only fell by 0.48 percent and 2.79 percent, respectively, during the same period, while Thailand's stock market rose by 4.25 percent and Singapore's by 1.18 percent.
The stock markets in the Philippines and Malaysia also rose. One could say that Taiwan's mar-ket was Asia's worst performer. Why? What does this weakness mean? This is something that both investors and the public in general should give further thought to.
Consider the 228 holiday last year. On that day, over 2 million people came forward and said "No" to China. They showed the world that the people of Taiwan love peace and oppose missiles. The next day, the TAIEX leaped by 137.89 points, closing at 6,888.43 points. Four days later, on March 5, the index reached last year's high, 7,135 points.
Counting from the market closure at 3,845 points on Oct. 11, 2002, the index had then increased by a full 3,290 points, or 85.6 percent. In other words, not long after President Chen Shui-bian (陳水扁) proposed his "one country on each side of the Taiwan Strait" model on Aug. 3, 2002, Taiwan's stock mar-ket began rising and it didn't slow down either during talk of writing a new constitution or holding a defensive referendum.
Instead, it began rising even more steadily following the demonstration in favor of changing Taiwan's national title on Sept. 9 and the 228 demonstration, which set Chen on the road toward re-election and shattered the misleading statements that the economy would suffer unless the cross-strait relationship was dealt with.
Unfortunately, this wave of "Taiwan consciousness" quickly subsided after Chen was re-elected on March 20. The pan-blue camp's month-long demonstrations and protests outside the Presidential Office not only succeeded in taking the edge off "Taiwan consciousness," they also created an illusion in the governing party of "having lost the argument."
The so-called "New Culture Discourse" of the DPP's younger members was a product of this illusion. Although it was a reaction to serious ethnic divisions, Taiwan consciousness became viewed as the catalyst of those divisions and legitimized pan-blue protests to a certain extent.
From that point on, the pan-green's "Love Taiwan" and "name rectification" ideals lost their appeal to the general public. Identification with a Taiwan consciousness rapidly subsided and planted the seeds for the pan-green's downfall in last month's legislative elections.
Following the decline of Tai-wan consciousness, the social force reflected in the stock market also disappeared. As society lost its focus, an inevitable result was that capital flowed out of the country and manufacturers turned their gaze back toward China.
Last year, Taiwanese investments in China (approved by the Investment Commission of the Ministry of Economic Affairs) increased by 52 percent from the previous year, and following relaxations on offshore banking regulations, domestic capital transferred to China via offshore banking units increased sharply -- almost NT$220 billion (US$7 billion) in October alone. This completely nullified the economic growth of 5.93 percent, and offset the NT$200 billion buying spree of foreign investors on the Taiwanese stock market beginning last August.