The great fluctuations in global stock markets in recent weeks — sparked by fears about the debt problems in some European countries, the slowing US economy and rising inflation pressure in China — have rattled Taiwan’s stock market, causing the nation’s benchmark TAIEX to fall 201.72 points — 2.28 percent — in the past week, on the heels of a 2.3 percent decline the previous week.
According to data from the Taiwan Stock Exchange, the daily market turnover has continued to fall in recent weeks, suggesting that investors are having second thoughts about the outlook for the stock market as the first half of the year approaches its end.
Perhaps investor reticence comes from concerns about the ongoing debt crisis in the eurozone, particularly after Standard & Poor’s cut Greece’s credit rating deeper into junk territory on Monday last week to “CCC” from “B,” making Greece the country with the lowest credit rating in the world — lower than Pakistan.
Also last week, credit default swap spreads rose to new highs in a number of weak eurozone countries such as Ireland, Portugal and Spain amid contagion fears in the region, further dampening consumer confidence and weighing on the eurozone nations’ economic growth.
It is also likely that investors are worried about market liquidity after higher inflation in emerging economies such as China, India and Brazil prompted their central banks to take aggressive monetary tightening measures to curb bank lending. This has a negative impact on equity markets. On Thursday, for instance, Hong Kong’s and Shanghai’s stock markets both moved below their 12-month moving average levels to end at nine-month lows on concerns over China’s measures to curb lending.
In addition, several heavyweight listed companies — including Acer, Hon Hai Precision Industry, Taiwan Semiconductor Manufacturing Co (TSMC), United Microelectronics, MediaTek and Formosa Petrochemical — provided shareholders with cautious assessments of their sales outlook for the second half of the year. Although these companies said their outlook for next year remained positive, their latest assessments suggest that demand for their products will slow in the months ahead.
Finally, continued sell-offs of large-cap stocks such as HTC, TSMC and Hon Hai by foreign institutional investors amid growth concerns could well prove to be the biggest uncertainty for Taiwan’s stock market over the coming weeks.
While most economists say the global economy, while growing at a slower pace, is unlikely to experience a double-dip recession in the near term, renowned New York University economist Nouriel Roubini said on June 11 that there is a possibility that US fiscal woes, the European sovereign debt problem and an economic slowdown in China could combine into a “perfect storm” that could threaten the global economy.
Investors may not agree with Roubini’s view, nor Taiwan Research Institute founder Liu Tai-ying’s (劉泰英) warning on Tuesday of another global financial crisis next year, but there is little reason to feel optimistic over the prospects for the local stock market in the short term, not to mention that recent sell-offs have made the market very technically unstable.
The only sure thing for investors is that the second half of the year looks to be nothing if not uncertain and concerns over the ongoing sustainability of the global economy will no doubt continue to haunt them from time to time.
Two major Chinese Communist Party (CCP)-People’s Liberation Army (PLA) power demonstrations in November 2024 highlight the urgency for Taiwan to pursue a military buildup and deterrence agenda that can take back control of its destiny. First, the CCP-PLA’s planned future for Taiwan of war, bloody suppression, and use as a base for regional aggression was foreshadowed by the 9th and largest PLA-Russia Joint Bomber Exercise of Nov. 29 and 30. It was double that of previous bomber exercises, with both days featuring combined combat strike groups of PLA Air Force and Russian bombers escorted by PLAAF and Russian fighters, airborne early warning
For three years and three months, Taiwan’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has remained stalled. On Nov. 29, members meeting in Vancouver agreed to establish a working group for Costa Rica’s entry — the fifth applicant in line — but not for Taiwan. As Taiwan’s prospects for CPTPP membership fade due to “politically sensitive issues,” what strategy should it adopt to overcome this politically motivated economic exclusion? The situation is not entirely dim; these challenges offer an opportunity to reimagine the export-driven country’s international trade strategy. Following the US’ withdrawal from the Trans-Pacific Partnership
Since the end of former president Ma Ying-jeou’s (馬英九) administration, the Ma Ying-jeou Foundation has taken Taiwanese students to visit China and invited Chinese students to Taiwan. Ma calls those activities “cross-strait exchanges,” yet the trips completely avoid topics prohibited by the Chinese Communist Party (CCP), such as democracy, freedom and human rights — all of which are universal values. During the foundation’s most recent Chinese student tour group, a Fudan University student used terms such as “China, Taipei” and “the motherland” when discussing Taiwan’s recent baseball victory. The group’s visit to Zhongshan Girls’ High School also received prominent coverage in
Late on Tuesday evening, South Korean President Yoon Suk-yeol declared martial law. A BBC analysis cited as reasons the opposition parties’ majority in the National Assembly, their continued boycott of the national budget and the impeachment of key officials and prosecutors, leading to frequent government gridlock. During the years that Taiwan and South Korea traveled the road to democratization, our countries hit many potholes. Taiwan cannot return to the Martial Law era. Despite the similarities in our authoritarian past, Yoon’s political travails are far removed from the issues Taiwan faces. Yoon’s actions are a wake-up call to the world about
RSS