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.
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
Six Taiwanese companies, including contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), made the 2025 Fortune Global 500 list of the world’s largest firms by revenue. In a report published by New York-based Fortune magazine on Tuesday, Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), ranked highest among Taiwanese firms, placing 28th with revenue of US$213.69 billion. Up 60 spots from last year, TSMC rose to No. 126 with US$90.16 billion in revenue, followed by Quanta Computer Inc (廣達) at 348th, Pegatron Corp (和碩) at 461st, CPC Corp, Taiwan (台灣中油) at 494th and Wistron Corp (緯創) at
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip assembly and testing service provider, yesterday said it would boost equipment capital expenditure by up to 16 percent for this year to cope with strong customer demand for artificial intelligence (AI) applications. Aside from AI, a growing demand for semiconductors used in the automotive and industrial sectors is to drive ASE’s capacity next year, the Kaohsiung-based company said. “We do see the disparity between AI and other general sectors, and that pretty much aligns the scenario in the first half of this year,” ASE chief operating officer Tien Wu (吳田玉) told an