Investors might take heart from the latest twist in the presidential race, as a tie-up of opposition candidates raises the odds of a more China-friendly government taking post next year.
The benchmark TAIEX rose on Wednesday and the New Taiwan dollar advanced, as traders digested the announcement that the Chinese Nationalist Party (KMT) and the Taiwan People’s Party (TPP) would put forward a united candidate. That came as a relief for some who have been worried about a potential deterioration in cross-strait relations should Vice President William Lai (賴清德), the Democratic Progressive Party’s (DPP) presidential candidate, who has consistently led opinion polls, win.
Geopolitical risks have been an overhang over Taiwanese equities for years, with investors fretting over the possibility of a military conflict between Taipei and Beijing. While the TAIEX has rallied more than 20 percent this year as an artificial intelligence (AI) boom buoyed chip giants, foreigners are on track for a fourth straight year of outflows.
Photo: CNA
“It gives us a sense of temporary relief on the election uncertainty,” said Xiadong Bao, a fund manager at Edmond de Rothschild Asset Management in Paris. “The alliance raises the potential for further dialogues to improve cross-strait relations.”
Voters going to the polls on Jan. 13 are to choose between a ruling party determined to maintain Taiwan’s sovereignty, and an opposition that sees closer ties with China as the only viable path. The outcome would define Taipei’s relations with Beijing in the years to come, while also setting the tone for US-China tensions.
Then-US House of Representatives speaker Nancy Pelosi’s visit to Taipei in August last year raised angst in financial markets, as Beijing ratcheted up military drills around Taiwan in a show of warning. The TAIEX fell 1.6 percent in the session before Pelosi met President Tsai Ing-wen (蔡英文), but posted small gains on the day.
“Taiwan market volatility tended to rise in the six months leading up to the presidential elections,” Goldman Sachs Group Inc strategists including Alvin So (蘇瑋忠) wrote in a note. “Taiwan equities have shown greater performance in the three months following a KMT victory, while underperforming significantly after a DPP victory.”
While the election remains a key focus, the Taiwanese market is also affected by an array of factors, including the US monetary policy, as well as semiconductor and AI cycles.
A potential dovish pivot by the US Federal Reserve might drive more inflows into emerging markets, with such expectation on full display on Wednesday following a softer-than-expected US inflation report.
The local currency on Wednesday rose the most since July after sliding more than 4 percent this year, hammered by a large rate differential with the US and equity outflows. The TAIEX closed up 1.3 percent.
Wednesday’s announcement by the opposition “should be broadly positive for Taiwanese and Chinese assets, especially when considered in conjunction with improving US-China relations,” said Rory Green, China economist at TS Lombard.
Sectors most exposed to cross-strait trade, including semiconductor companies, agriculture producers and tourism-related firms stand to benefit, he added.
NEW IDENTITY: Known for its software, India has expanded into hardware, with its semiconductor industry growing from US$38bn in 2023 to US$45bn to US$50bn India on Saturday inaugurated its first semiconductor assembly and test facility, a milestone in the government’s push to reduce dependence on foreign chipmakers and stake a claim in a sector dominated by China. Indian Prime Minister Narendra Modi opened US firm Micron Technology Inc’s semiconductor assembly, test and packaging unit in his home state of Gujarat, hailing the “dawn of a new era” for India’s technology ambitions. “When young Indians look back in the future, they will see this decade as the turning point in our tech future,” Modi told the event, which was broadcast on his YouTube channel. The plant would convert
Nanya Technology Corp (南亞科技) yesterday said the DRAM supply crunch could extend through 2028, as the artificial intelligence (AI) boom has led the world’s major memory makers to dramatically reduce production of standard DRAM and allocate a significant portion of their capacity for high-bandwidth memory (HBM) chips. The most severe supply constraints would stretch to the first half of next year due to “very limited” increases in new DRAM capacity worldwide, Nanya Technology president Lee Pei-ing (李培瑛) told a news briefing. The company plans to increase monthly 12-inch wafer capacity to 20,000 in the first half of 2028 after a
Property transactions in the nation’s six special municipalities plunged last month, as a lengthy Lunar New Year holiday combined with ongoing credit tightening dampened housing market activity, data compiled by local land administration offices released on Monday showed. The six cities recorded a total of 10,480 property transfers last month, down 42.5 percent from January and marking the second-lowest monthly level on record, the data showed. “The sharp drop largely reflected seasonal factors and tighter credit conditions,” Evertrust Rehouse Co (永慶房屋) deputy research manager Chen Chin-ping (陳金萍) said. The nine-day Lunar New Year holiday fell in February this year, reducing
Zimbabwe’s ban on raw lithium exports is forcing Chinese miners to rethink their strategy, speeding up plans to process the metal locally instead of shipping it to China’s vast rechargeable battery industry. The country is Africa’s largest lithium producer and has one of the world’s largest reserves, according to the US Geological Survey (USGS). Zimbabwe already banned the export of lithium ore in 2022 and last year announced it would halt exports of lithium concentrates from January next year. However, on Wednesday it imposed the ban with immediate effect, leaving unclear what the lithium mining sector would do in the
RSS