After the meeting between President Ma Ying-jeou (馬英九) and Chinese President Xi Jinping (習近平), the TAIEX fell about 450 points. The stock market fell for four days running, and with the gradual withdrawal of foreign investment, it will be hard for the TAIEX to even hit a target of 8,300 points for the quarter. It was a cruel blow to investors, who suffered heavy losses.
Some netizens described “the Ma effect” as a kiss of death, as the Ma-Xi meeting even brought the local bourse to its knees.
On Wednesday last week, after the local stock market had been falling for several consecutive days, Minster of Finance Chang Sheng-ford (張盛和) said that the National Stabilization Fund had been activated and that its involvement was ongoing.
Since US Federal Reserve Chair Janet Yellen gave a briefing saying that interest rates would be raised before the end of the year, the majority view in the market is that the US is to announce a hike in interest rates in the middle of next month, Chang said, adding that a rise would indicate the US economy had turned a corner and that this was a good thing.
However, short-term foreign investment would begin to flow back to the US — benefiting from the increase in interest rates, and this would put pressure on the TAIEX, Chang said.
In an interpellation session in the legislature, both Chang and Financial Supervisory Commission Chairman William Tseng (曾銘宗) agreed that the original KMT-proposed amendments to the capital gains tax bill should not be submitted.
Chang, who had previously been strongly opposed to abolishing the capital gains tax, said he hoped that another amendment abolishing the tax would be swiftly passed to benefit the stock market.
The way in which the Ma administration’s absurd financial policy has damaged stock market investors is evidenced by the following chain of events:
First, in a bid to prop up the stock market and thereby resuscitate the KMT’s lackluster election campaign, it inexplicably employed the National Stabilization Fund. As a result, for the past couple of months the movements of the Taiwanese stock market have been been directly contradictory to those of developed countries such as the US, Japan and Germany — when the markets in those countries rose, Taiwan’s fell, and when they fell, Taiwan’s rose.
Vice Minister of Finance Wu Tang-chieh (吳當傑), who is also executive secretary of the National Stabilization Fund, even said that when the fund entered the stock market, it boosted turnover by more than 10 percent, adding that thanks to the fund’s support, by Sept. 30, the stock market had increased by 10.4 percent, the highest in the world and an indication that investors’ confidence had returned in full.
Second, directly after the Ma-Xi meeting, the government once again spouted nonsense, intimating that the stock market could rise to more than 10,000 points.
MSCI last week cut Taiwan’s weightings in three of its indices — which does not augur well.
Tseng admitted that market worries about a rise in US interest rates and concern about the MSCI weighting had resulted in the TAIEX falling by more than 100 points on Wednesday last week.
Faced with such an incompetent government and its absurd economic policy, investors must rely on their own wisdom and pay more attention to diversifying their investment risks. In fact, their best protection policy would be to hang on to their cash.
Kuo Chen-hero is an adjunct professor in the School of Business at Soochow University.
Translated by Clare Lear
Recently, China launched another diplomatic offensive against Taiwan, improperly linking its “one China principle” with UN General Assembly Resolution 2758 to constrain Taiwan’s diplomatic space. After Taiwan’s presidential election on Jan. 13, China persuaded Nauru to sever diplomatic ties with Taiwan. Nauru cited Resolution 2758 in its declaration of the diplomatic break. Subsequently, during the WHO Executive Board meeting that month, Beijing rallied countries including Venezuela, Zimbabwe, Belarus, Egypt, Nicaragua, Sri Lanka, Laos, Russia, Syria and Pakistan to reiterate the “one China principle” in their statements, and assert that “Resolution 2758 has settled the status of Taiwan” to hinder Taiwan’s
Singaporean Prime Minister Lee Hsien Loong’s (李顯龍) decision to step down after 19 years and hand power to his deputy, Lawrence Wong (黃循財), on May 15 was expected — though, perhaps, not so soon. Most political analysts had been eyeing an end-of-year handover, to ensure more time for Wong to study and shadow the role, ahead of general elections that must be called by November next year. Wong — who is currently both deputy prime minister and minister of finance — would need a combination of fresh ideas, wisdom and experience as he writes the nation’s next chapter. The world that
The past few months have seen tremendous strides in India’s journey to develop a vibrant semiconductor and electronics ecosystem. The nation’s established prowess in information technology (IT) has earned it much-needed revenue and prestige across the globe. Now, through the convergence of engineering talent, supportive government policies, an expanding market and technologically adaptive entrepreneurship, India is striving to become part of global electronics and semiconductor supply chains. Indian Prime Minister Narendra Modi’s Vision of “Make in India” and “Design in India” has been the guiding force behind the government’s incentive schemes that span skilling, design, fabrication, assembly, testing and packaging, and
Can US dialogue and cooperation with the communist dictatorship in Beijing help avert a Taiwan Strait crisis? Or is US President Joe Biden playing into Chinese President Xi Jinping’s (習近平) hands? With America preoccupied with the wars in Europe and the Middle East, Biden is seeking better relations with Xi’s regime. The goal is to responsibly manage US-China competition and prevent unintended conflict, thereby hoping to create greater space for the two countries to work together in areas where their interests align. The existing wars have already stretched US military resources thin, and the last thing Biden wants is yet another war.