Calling China's Taiwan Bluff
Politics not economics is usually the first concern for most investors considering investing in Taiwan. For the next couple of years, both lead to a window of opportunity for investors with nerve and foresight. There is little doubt that for the leadership of the Chinese Communist Party, Taiwan is a bone in their throat - a constant irritant – and most likely an obsession for some hard-line factions determined to bring Taiwan back into the fold of the motherland. So sensitive is the issue that an uproar ensued when Google deleted the words “Taiwan, a province of the People’s Republic of China” during a recent routine update of its online map of Taiwan Even so, any noise that Beijing will take near term military action against Taiwan is likely a bluff for five reasons. First, any military conflict with Taiwan would surely cancel the Beijing’s showcase 2008 Olympics. This would be a devastating setback for China’s leadership and people Second, Beijing’s approach of working quietly to support more friendly political factions within Taiwan seems to be working. In the municipal elections held on December 3rd, the so called “Pan Blue” coalition, composed of parties more flexible regarding reunification with China than the ruling party, captured 17 out of 27 seats building on the coalition’s success in the 2004 legislative election. In addition, Taiwanese President Chen Shui-bian’s term will end in 2008 and Beijing is betting on a less strident and independent successor. Third, although China is rapidly modernizing its military forces, U.S. treaty obligations to Taiwan in the event of an invasion cannot be discounted. In addition, President Chen, citing China’s expanded missile program in his annual New Year’s Day address, called for the legislature to approve plans to purchase more weapons from the U.S. to offset the buildup. Fourth, a 2005 joint statement by the Japanese and U.S. governments that both countries had a “common strategic objective” to “encourage the peaceful resolution of issues concerning the Taiwan Strait through dialogue,” raises the possibility of Japanese intervention making the military option even more risky and improbable. Lastly, the economic integration of Taiwan into China is moving ahead at a breathtaking rate. Cross-Straits trade has doubled since 2000 to reach $62 billion in 2004, about 1 million Taiwanese have re-located to work in China, and Taiwanese companies now account for about 65% of hardware output from the mainland. My view is that while calls for independence have at least temporarily been muted, the desire for a high degree of autonomy from China is still strong. There may be one China but there are three systems – China, Hong Kong and Taiwan. Perhaps the best solution is for China and Taiwan to formally agree to a long period of Taiwanese autonomy to see if China’s system evolves into a more open, transparent system with rule of law and democratic institutions. Taiwan with a population of 23 million and an area of 14,000 square miles (half the size of Ireland) is a remarkable success story. However, but Taiwanese companies will need to constantly innovate, make Taiwan a major R&D center and build strong consumer brands to avoid the it’s economy from being swallowed by the mainland. If you can get over the political risk and are ready to call China’s bluff, Taiwan’s stock market represents good value though you should expect some volatility. In his New Year’s Day address, President Chen also called for Taiwan to maintain and nurture a separate identity and renewed his pledge to have a new constitution in place before he leaves office in 2008. Concerns about the remarks impact on China relations led the next day to Taiwan stocks day falling 1.3% but the next day the market promptly bounced back 2% to reach a twenty month high as investors focused on economic fundamentals. The laptop maker Wistron alone rose the daily 7% limit to an all time high. Taiwan’s stock market was up only 6% in 2005 lagging Asian markets such as Japan, up 42% and South Korea, up 54%. One company that had a great year is Taiwan Semiconductor (NYSE: TSM) which was up over 35% and still looks like a buy. It has a return on equity of 16%, a strong balance sheet and a low level of institutional ownership. If you want more diversification, you should invest in the iShares Taiwan (EWT) exchange- traded fund. It has a 23% exposure to the semiconductor industry and Taiwan Semiconductor accounts for 14% of its holdings but it includes significant exposure to technology hardware, materials and banks. In 2005, Japan, Australia and South Korea were the most successful China plays. In 2006, why not take some profits and place a bet on Taiwan, also known legally as the Republic of China. Delfeld has 20 years of global investment experience including stints in Hong Kong, Sydney and Tokyo and served on the Executive Board of the Asian Development Bank in Manila. He was also a consultant to the U.S. Treasury and the U.S. Congress on international investing and is a columnist on global investing for Forbes Asia magazine. For more information about Chartwell’s ETF investor advisory services, please go to http://chartwelladvisor.com/etf_investing.html or call Carl Delfeld direct at (719) 264-1503. |
Other Trading System Articles
FOREX: Reading Quotes For Success There are a number of deciding factors for determining the price of a particular currency. The most important factors are the political and economic conditions in the country that issues the currency. Many things like the political stability, interest rates, and inflation will all affect the price of a currency. In some cases the issuing gover ...Campgrounds in Nebraska Mention Nebraska and the first thing that comes to mind is college football. Well, the season only runs part of the year, which gives you plenty of time to experience the campgrounds in Nebraska.Campgrounds in NebraskaNebraska's state park system consists of 87 areas in 6 regions; Panhandle, Sandhillls, North East, South West, Sout ...10 E-mail Organization Tips Who doesn't have issues with organizing their inbox!? I receive close to 600 e-mail each day due to the variety of activities and contacts I have online. Some I am truly interested in their content - most I am not.A big part of keeping your inbox and your e-mail organized is discipline. Yep, good ole' fashioned discipline! You need to mak ...Tips for Foreign Exchange Trading Rookies Have you thought of starting a new career not bound by an eight hour job in the office? Work-at-home job is steadily gaining momentum and popularity among adventure-seekers.Aside from becoming web-content writers or typists, trading foreign exchange (FOREX) currencies can be a bankable endeavor for you. Although, this needs practice, visi ...Trade Entry Techniques Most traders tend to concentrate on pinpointing the perfect entry for a trade. However, in reality the entry price is just one part of the equation. The common entry techniques are:Channel BreakoutsA trend trader will tend to use channel breakouts to enter trades in order to catch a trend when it is beginning. The general ...Investing in Big Business Can be Done Ethically This is something that more people are finding to be quite important but also find very hard to do. The concept to others seems to be very foreign.When people invest in companies it is all to easy to step back and look at nothing but the numbers. After all, the investor is in it for the money and is not really a part of the company. All t ...Dxinone E-currency Trading E-currency trading is growing into a worldwide business. If you are looking for a growing business that will never let down E-currency is a great one. Dxinone is a very confusing system for a person that has never seen or used it before. If you have no idea how to sign up or start to fund your account you will miss out on a very go ...The MLM Dilemma Does this sound familiar...?You have taken ALL of the company training, listened to the tapes, recorded phone calls and live conference calls, read all the company materials and tried the products. You bought some inventory, made business cards, set up the web site that the company provided for you.You have purchased leads, set up ...Network Marketing's Best Kept Secret May Be Costing You a Fortune The words, "I quit..." have never been more costly.Network marketers hear "I quit" all too often from distributors they have sponsored. However, if those new distributors only knew the thousands of dollars they were throwing away, they would never quit. Here's Why?The moment your prospect enrolls in your program, they may be eligib ...Good to Know Stock Trading Information Stock trading is a complex process that may be quite confusing and deceitful to a new trader. Therefore, if you plan to start investing your money in shares, you should first choose a stock trading strategy that is most suitable for yourself.The major difference between stock trading strategies is based on timeframe. It means that an acti ...How to Get a Lower Blood Pressure Using Medical Treatment The treatment for lowering the blood pressure is usually recommend by physicians for patients with a blood pressure of above 160/95mmHg. For those with a blood pressure immediately bellow these values it is taking into account age, sex or other individual factors of the patients before taking the treatment.The first kind of treatment reco ...Money IS Green Money IS green! And here all these years I thought "money", for Americans, only consisted of paper "fiat" script. Or printed wastepaper, if you prefer.Money, that is REAL money, was invented by a guy named Penny, in England. This is our more modern variety. There has existed money in the form of coins or medallions for almost all of human ...Forex Signal Trading - What Shoud I Be Looking For? Forex offers many support services for its traders, including Forex signal trading. Either Forex brokers or independent analysts monitor and analyze the market. Signal trading includes identifying trends. They identify these trends in the Forex market by using many varied and subtle indicators. These indicators are used in Forex signal trading t ...The Stock Trading Plan 1. That discipline contributed more to their success than their trading philosophy itself. Remember that the key to any plan is how well it holds over time.2. There is no "sure thing", and there is no trading system that is 100% accurate. Your goal, as a trader, is to usethe tools available and try to develop an edge. Base your trades on ...eBay Consignments: The Giant Opportunity Hiding on eBay (Part I) More and more, people are becoming aware that they have potential cash sitting in their closets, attics, and basements. But not everyone has the time or the know-how to tap into it, so these items remain where they are or are given away. Or worse, they're tossed out with the trash. eBay is about to change that.eBay Consignments are a Grow ...The World Doesn’t Need Another Math Textbook I know this statement is shocking. Some of you may feel that I have announced the end of the civilization as we know it. How in the world will people learn math without the latest and greatest math textbook. The answer is simple. The same way people have always learned math prior to the modern education system, by doing math as they go about the ...Burning Incense Incense has always played an important role in the religious ceremonies and rites of people all over the world.Records tell us that in ancient Babylon, an immense amount of incense was burnt in offerings to the gods. It has always been an integral part in the life of the people in Asian countries where the floral perfumes were blended wi ...More Men than Women Abuse Power Since there are fewer women than men in positions of power, it stands to reason that fewer women abuse it. But there is a more intimate reason for the absence of women in the scandals of abuse of power.It is a psychological fact of life that women are more concerned about their insides than about insider trading. Women are inner-oriented ...Portuguese Market General economic indexes Portuguese market:Located in the South-Western Europe Portugal serves as a gateway to Europe. Its GDP equals to 188,700,000,000 USD, GDP per capita equals 17,900 USD; inflation rate equals to 4.4 percent, unemployment rate equals to 4.4 percent, Portuguese external debt equals to 13,100,000,000 USD . Portugal is a ...Why Are Coalbed Methane Stocks Red Hot? Eric Nuttall:Coal bed methane (CBM) is perhaps one of the last significant natural gas resources available in Canada. With the maturing of the Western Canadian Sedimentary Basin, the potential for elephant sized discoveries has been greatly reduced. Higher natural gas prices have also greatly improved the economics for CBM exploitation. W ...Asia's New Investment Jewel China is in its Glory, now Look to the Future.Let’s discuss an Asian country that could present us with the next great bull market of the 21st century – an opportunity that has the potential of being a better investment than even China!Like China, this country was stuck with a failed economic system for over 50 years. It was ...Danish Market General economic indexes:General information about Denmark and its economics shows that this is economically developed and successful country, member of European Union, with GDP equal to $174,400,000,000 USD and GDP per capita equal to $32,200 USD in 2004 (by the way it is one of the highest indicators in the world), unemployment rate eq ...12 Smart Trading Runescape Tip When you play RuneScape trading is everything! Here are twelve smart RuneScape tips to give you a significant edge over other RuneScape players.1.Never buy anything from a RuneScape shop (unless it’s stackable) because it will be more expensive than trading with a RuneScape friend.2.Don’t get scammed! There’s no worse feeling in th ...Discount Metal Detectors The importance of metal detectors is growing day by day, as they are employed for all purposes from leisure to work and safety. Metal detectors of various types and prices are available now. Usually, the price of a metal detector starts from $75.00. But, the prices of metal detectors with most sophisticated features and functions, such as Garret ...Can Car Insurance Be Affected By Your Bad Credit History? If you have bad credit you can be denied car insurance! The protections afforded to the consumer since the Depression of 1929 no longer exist. The Financial Laws passed through Congress in 1992 allowed banks, insurance companies, investment firms to handle banking, insurance and investment operations. Laws passed after 1929 had prevented banks f ...New to Investing? Simple Guidelines for Success A financial advisor and friend once told me, “It doesn’t matter how good of job someone has, if they want to acquire wealth in this life, at some point they are going to have to invest in something.” Investing is something most people will do during their lifetime. They may invest in real estate, life insurance, stocks, bonds, mutual funds or a ...Stock Market for Dummy It is not easy to start trading on the stock market when you have no financial background at all. It shouldn’t be difficult to prosper, though, if you follow certain guidelines. Being organized and disciplined are two very important factors in this business. Don’t let all the information you gather confuse you. Make sure important decisions are ...Forex Trading - Understand Your Principles Forex trading has been growing rapidly among day traders since the 1990s, as day traders have seen the advantages that trading currencies can have over trading stocks. However, since there are fewer currencies for beginners to purchase over the large number of stocks available, forex trading can be much more difficult for a newcomer to learn an ...Does Arbitrage Trading Work? If you are reading this you must be interested in working at home or Arbitrage Trading. When most people think of work at home they think sitting at home doing nothing while the money just roles in. Well that is why 99% of people trying to work from home fail. The money doesn’t just role in. It still takes work and its still a job. ...
|
