Market Reacts to Taiwan’s Election
The general sentiment of the economic outlook written on 03.21 is reflected today in markets. The article on 03.21 is here:
http://royho.wordpress.com/2008/03/21/taiwan-count-down-1/
This is from Reuters:
http://edition.cnn.com/2008/WORLD/asiapcf/03/21/taiwan.elections/index.html#cnnSTCText
CNN:
http://money.cnn.com/2008/03/24/news/international/taiwan_markets.ap/index.htm
CNN has a summary of the post election here:
http://edition.cnn.com/2008/WORLD/asiapcf/03/23/taiwan.ma.ap/index.html#cnnSTCText
http://edition.cnn.com/2008/BUSINESS/03/24/taiwan.markets.ap/index.html
Some stocks are going up in Hong Kong and Shanghai as well. Stocks in Shanghai will have a much shorter ride. Since you probably cannot trade in Shanghai’s market, you cannot be exposed to it. Your mutual fund may. If your mutual fund does not have a local office, it may not actually understand political dymanics and the reasons for its short ride. This is a good opportunity to watch your fund manager.
You may happen to have some stocks in Hong Kong since HK is a lot more accessible to foreign capital and quite a good amount of their listed companies are also listed elsewhere (London, NY’s 2 markets). This ride could be slightly longer. New president does not come until much later. So, all these trades are also emotional.
Some Taiwan companies are traded overseas. These rides are longer. Again, new president does not come until May 2008. So, these are sentiment trades. One may want to wait untill some announcements come. But it is the time to study the annual reports.
Is the Taiwan the safest bet while the USD continues to fall? It is not as easy to hold foreign currency in US as in some other countries. So, holding a foriegn currency at the retail level is not easy. The second best is to find a foreign currency/foreign money market fund. The third is to find conservative funds with foreign positions, foreign as in outside of North America (Canada is not safe enough). If you are a hands-on kind of guy, and you are interested in this region, then Taiwan banks are okay (among the public tradable in NY). Avoid banks in Mainland China (for a different reason). Some other FIs are okay, but not banks.
