Vote-buying in Taiwan appears in many schemes, but the granddaddy of them all must surely be the government's stock stabilization fund. Which is why it should come as little surprise to hear President Lee Teng-hui (李登輝) announce at a campaign rally yesterday that "9,400 is the level at which the stock market would be supported." The KMT is in a fight for its political life, it needs all the votes it can get, and the stock market is the best place to go shopping for them.
How so? Even taking into consideration Taiwan's daily trading volumes (Asia's highest), the NT$500 billion under management in the stabilization fund will take awhile to burn through if investors get skittish; probably long enough to see the KMT through to election day. With one in three families in Taiwan owning stocks, this is tantamount to holding out a hong bao (red envelope) to four million people.
Of course, that's not the way the government sees it. President Lee himself compared last week's 7.2 percent slide in the TAIEX to the decline of 1996, when China was lobbing missiles in Taiwan waters. Blaming Beijing's recent white paper for generating the same reaction this time around, Lee "reminded" investors that the government has twice as many funds at its disposal now to combat such a psychological threat. It's a matter of national security.
At what point national security becomes KMT security is another matter, however. Because by looking at the numbers, it becomes clear that this year's support plan for the market has far less to do with the threat from China than it does with the challenge of Chen Shui-bian (
First of all, 9,400 is not exactly scraping the barrel. In fact, it's 600 points shy of the 10,000-point holy grail and nearly a quarter higher than where the TAIEX was just two months ago. Given the amazing recent run-up, it's hardly surprising that mom and pop are taking profits. For them, the air is rare at this level. Given the historic volatility of the market, and with plenty of new Internet-related listings on the horizon, they have every reason to thank the gods for giving them a sign that they should get out while the going's good, take a breather, and get back in when dotcom fever strikes. The white paper may have been that sign, but they had been looking hard for it.
Second, NT$500 billion sounds impressive, but it wouldn't do much during a fullscale panic. The Hong Kong government spent almost the same amount (US$15 billion) in a matter of days during the height of the Asian crisis two years ago. What did it achieve? Little more than make the territory's government the biggest shareholder in its stock market.
So, in calling a spade a spade, it has to be pointed out that what is more important for the KMT to achieve with its stabilization fund is the stability of voter preference. The subtle message of the fund being, "With us, you can continue to play the market at ease; without us, who knows where the TAIEX would go."
Not that this is entirely despicable, because any party that controlled the levers of power in Taiwan would do the same thing. Why? Because the electorate demands it. The stock market is a central tenet of people's lives on this island. It is a place where children's college educations are financed, where grandmothers go to swap stories on a lazy morning, and where the wife of the Vice President can declare with impunity, "15,000 or bust!" Any administration that neglects such a pillar of society deserves to be thrown out of office.
The only question is, for how much longer can it continue this way? Based on what Lee said yesterday, that will obviously be an issue for the next president to contemplate.
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