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.
As China steps up a campaign to diplomatically isolate and squeeze Taiwan, it has become more imperative than ever that Taipei play a greater role internationally with the support of the democratic world. To help safeguard its autonomous status, Taiwan needs to go beyond bolstering its defenses with weapons like anti-ship and anti-aircraft missiles. With the help of its international backers, it must also expand its diplomatic footprint globally. But are Taiwan’s foreign friends willing to translate their rhetoric into action by helping Taipei carve out more international space for itself? Beating back China’s effort to turn Taiwan into an international pariah
Typhoon Krathon made landfall in southwestern Taiwan last week, bringing strong winds, heavy rain and flooding, cutting power to more than 170,000 homes and water supply to more than 400,000 homes, and leading to more than 600 injuries and four deaths. Due to the typhoon, schools and offices across the nation were ordered to close for two to four days, stirring up familiar controversies over whether local governments’ decisions to call typhoon days were appropriate. The typhoon’s center made landfall in Kaohsiung’s Siaogang District (小港) at noon on Thursday, but it weakened into a tropical depression early on Friday, and its structure
Since the end of the Cold War, the US-China espionage battle has arguably become the largest on Earth. Spying on China is vital for the US, as China’s growing military and technological capabilities pose direct challenges to its interests, especially in defending Taiwan and maintaining security in the Indo-Pacific. Intelligence gathering helps the US counter Chinese aggression, stay ahead of threats and safeguard not only its own security, but also the stability of global trade routes. Unchecked Chinese expansion could destabilize the region and have far-reaching global consequences. In recent years, spying on China has become increasingly difficult for the US
Lately, China has been inviting Taiwanese influencers to travel to China’s Xinjiang region to make films, weaving a “beautiful Xinjiang” narrative as an antidote to the international community’s criticisms by creating a Potemkin village where nothing is awry. Such manipulations appear harmless — even compelling enough for people to go there — but peeling back the shiny veneer reveals something more insidious, something that is hard to ignore. These films are not only meant to promote tourism, but also harbor a deeper level of political intentions. Xinjiang — a region of China continuously listed in global human rights reports —
RSS