How would Taiwan’s stock market perform if an economic cooperation framework agreement (ECFA) with China were signed this year?
Figures released by National Chengchi University’s Center for Prediction Market on Thursday put the probability that an ECFA would boost the TAIEX at 75 percent, but the odds of the benchmark index reaching 10,000 points this year at just 33.3 percent.
Investors have been cautious about an ECFA during the run-up to the signing and analysts have said an ECFA would only be a mildly positive market factor.
With the TAIEX showing a decline of 2.25 percent so far this year, no one should be surprised if the ECFA’s signing does not meet original market expectations, given what we have already learned from the signing of a cross-strait memorandum of understanding on financial supervision last year.
However, the good news is that major technology firms in Taiwan have posted stronger-than-expected first-quarter earnings over the past two weeks. Many of them also offered positive projections for the second quarter and the full year.
These results from companies such as Taiwan Semiconductor Manufacturing Co, AU Optronics Corp, HTC Corp, MediaTek Inc and Acer Inc showed the local technology sector has entered the second quarter at full steam, even though the current quarter is the traditional low season and many companies still face shortages of labor, components and raw materials.
The strong performance in the technology sector — the latest evidence of a recovery in the nation’s export-reliant economy — should provide support to the local stock market amid heightened concerns over China’s continued efforts to rein in property prices and the Greek debt crisis, which some fear could have a spillover effect to the global economy, as well as Taiwan’s.
Yet this would simply be a best-case scenario for anyone who plans to load up on shares, because the market has already priced in the impact of recent good news and will easily fall on whatever bad news hits — something like Iceland’s volcanic ash, the fraud charges brought against Goldman Sachs and the central bank’s heightened measures to control the inflow of hot money that has caused market fluctuations over the past few weeks.
Investors may well have taken in good corporate earnings, but they should always be cautious about companies’ positive business projections. Moreover, the global economic recovery underway is gradual and uneven, strong in emerging markets and weak in developed ones.
Of course, investors are not all pessimistic, as the economic conditions in this country are better than they were six months ago. Economists have not overlooked the strength of Taiwan’s economic recovery either. Last week, the Taiwan Institute of Economic Research forecast 5.11 percent GDP growth for this year, citing rising private investment and exports. A week ago, the IMF offered an even higher forecast of 6.5 percent.
Even so, a major risk to the projected growth is the central bank’s move to withdraw its monetary stimulus measures — which many economists have kept on talking about but, although they managed to agree on the form of action the central bank should take and when — in an attempt to deal with potential inflation and asset bubbles in this country.
An ECFA with China certainly will certainly have a long-term impact on Taiwan’s economy, but it will do little to help Taiwan’s unemployment, as suggested in the National Chengchi University study. It would be a while before the agreement could make a meaningful contribution to Taiwan’s economy.
Congressman Mike Gallagher (R-WI) and Congressman Raja Krishnamoorthi (D-IL) led a bipartisan delegation to Taiwan in late February. During their various meetings with Taiwan’s leaders, this delegation never missed an opportunity to emphasize the strength of their cross-party consensus on issues relating to Taiwan and China. Gallagher and Krishnamoorthi are leaders of the House Select Committee on the Chinese Communist Party. Their instruction upon taking the reins of the committee was to preserve China issues as a last bastion of bipartisanship in an otherwise deeply divided Washington. They have largely upheld their pledge. But in doing so, they have performed the
It is well known that Chinese President Xi Jinping’s (習近平) ambition is to rejuvenate the Chinese nation by unification of Taiwan, either peacefully or by force. The peaceful option has virtually gone out of the window with the last presidential elections in Taiwan. Taiwanese, especially the youth, are resolved not to be part of China. With time, this resolve has grown politically stronger. It leaves China with reunification by force as the default option. Everyone tells me how and when mighty China would invade and overpower tiny Taiwan. However, I have rarely been told that Taiwan could be defended to
It should have been Maestro’s night. It is hard to envision a film more Oscar-friendly than Bradley Cooper’s exploration of the life and loves of famed conductor and composer Leonard Bernstein. It was a prestige biopic, a longtime route to acting trophies and more (see Darkest Hour, Lincoln, and Milk). The film was a music biopic, a subgenre with an even richer history of award-winning films such as Ray, Walk the Line and Bohemian Rhapsody. What is more, it was the passion project of cowriter, producer, director and actor Bradley Cooper. That is the kind of multitasking -for-his-art overachievement that Oscar
Chinese villages are being built in the disputed zone between Bhutan and China. Last month, Chinese settlers, holding photographs of Chinese President Xi Jinping (習近平), moved into their new homes on land that was not Xi’s to give. These residents are part of the Chinese government’s resettlement program, relocating Tibetan families into the territory China claims. China shares land borders with 15 countries and sea borders with eight, and is involved in many disputes. Land disputes include the ones with Bhutan (Doklam plateau), India (Arunachal Pradesh, Aksai Chin) and Nepal (near Dolakha and Solukhumbu districts). Maritime disputes in the South China