The plunge in the local stock market on Friday, with the TAIEX falling below its 10-year moving average of 7,800 points, indicates three troubling messages.
First, investors have turned bearish on Taiwan despite the government’s renewed pledge of new economic stimuli. Second, the more than 20 percent decline in the market over the past four months represents a vote of no confidence in the Chinese Nationalist Party (KMT) government. Third, the continued losses from stock investments by the pension fund for retired public servants — military personnel, civil servants and public school teachers — and the labor insurance and pension funds pose a direct threat to everyone’s retirement plans, regardless of whether they have equities.
This is a crisis. A crisis for market sentiment, and a crisis of the public’s confidence in Taiwan.
The bad news, such as it is, is that there is slim chance of getting out of this dismal situation soon, given the current global and domestic economic uncertainties.
Some have said that Taiwanese should put aside the critical and polarized rhetoric of the past several years and focus, for as long as possible, on what matters: improving the investment environment in a way that helps prepare the nation’s children for the future.
Indeed, the government on Thursday unveiled its latest stimulus measures to shore up the export-reliant economy after the nation’s GDP weakened significantly last quarter. However, investors’ rush to dump shares the very next day indicated that they expect no good news in the short term from the government’s new initiatives, which focus mainly on structural reforms in the economy and will take time to create results.
Meanwhile, the Executive Yuan last week announced a 13.1 percent increase to next year’s government budget for public spending on infrastructure to NT$359.6 billion (US$10.9 billion), and the daily limit on Chinese individual visitors next month is to be expanded to 5,000 from the current 4,000 per day, as the government expects to rely more on domestic demand to help drive economic growth, in contrast with an export slowdown.
However, the impact of expansionary fiscal policy is not likely to take effect immediately either, because the government budget is only to be implemented from the beginning of next year. Furthermore, it is questionable whether a tourism policy that aims only to increase the volume of tourists to Taiwan, rather than drawing travelers with stronger spending power, can really benefit the domestic services sector.
It is little wonder that investors have largely deserted Taiwan, because the KMT government’s policies are nothing but recycled ideas. Some investors have complained about the higher tax burden, an issue the government is moving to address, while others have already reallocated their investment portfolios to higher-yielding assets abroad.
The latest central bank tallies showed that Taiwan registered a net outflow in its financial account for the 20th consecutive quarter in the second quarter, with a deficit of US$15.3 billion. Apparently, a lack of investment tools at home helped drive funds abroad, but this has raised particular concern of a further exodus of funds at a time when the domestic economy has been slowing down.
There is a saying that the stock market serves as a window into a nation’s economy. Taiwan’s stock market performance has been the weakest among all Asian countries this year, leaving many wondering whether this means the state of the nation’s economy will be the worst in the region this year. If the domestic property market also slows down and becomes dormant and there is no substantial pickup in global growth this year to offer some support to Taiwan’s export and manufacturing sectors, it might be time for everyone to prepare for tougher days ahead.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
In an article published on this page on Tuesday, Kaohsiung-based journalist Julien Oeuillet wrote that “legions of people worldwide would care if a disaster occurred in South Korea or Japan, but the same people would not bat an eyelid if Taiwan disappeared.” That is quite a statement. We are constantly reading about the importance of Taiwan Semiconductor Manufacturing Co (TSMC), hailed in Taiwan as the nation’s “silicon shield” protecting it from hostile foreign forces such as the Chinese Communist Party (CCP), and so crucial to the global supply chain for semiconductors that its loss would cost the global economy US$1
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
Sasha B. Chhabra’s column (“Michelle Yeoh should no longer be welcome,” March 26, page 8) lamented an Instagram post by renowned actress Michelle Yeoh (楊紫瓊) about her recent visit to “Taipei, China.” It is Chhabra’s opinion that, in response to parroting Beijing’s propaganda about the status of Taiwan, Yeoh should be banned from entering this nation and her films cut off from funding by government-backed agencies, as well as disqualified from competing in the Golden Horse Awards. She and other celebrities, he wrote, must be made to understand “that there are consequences for their actions if they become political pawns of
RSS