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Cross-Straits Negotiations and the TAIEX: What's Next for Taiwan?
11/13/2009 3:30:00 PM
Recent economic and business news out of Taiwan makes it hard to know what will happen in the next six minutes, much less in the next six months.
Here's a rundown of some of the most recent developments:
- The Kuomintang, Taiwan's ruling political party, said it will aggressively push for a historic trade pact with the Mainland at the 2009 Asia-Pacific economic summit.
- Financial regulators banned foreign investment in time deposits in an effort to keep the New Taiwan Dollar from appreciating.
- China-based Taiwanese billionaires sent home money in 2009 at a pace that totaled the island's biggest capital inflow in four years.
- A Washington, D.C.,-based think tank declared that "the most lucrative years from Taiwan-China business and trade have already passed" and encouraged Taiwan to seek new trading partners.
There's no consensus among Asia-watchers on whether Taiwan will succeed in formally tightening economic ties with China, and there is less agreement still on how much a trade deal would impact their economies. Taiwan's Central Bank is doing everything it can to keep the NTD stable, even as currency speculators bet on gains as high as 18% during the next two years.
So what's the story? Will closer ties to China improve or impair Taiwan's economy? Are the best years passed or yet to come? Is it time to get in or out of the TAIEX? What's next for the NTD? What can recent news items can tell us about what's most likely to happen next?
Where will the TAIEX go from here? Editor Mark Galasiewski regularly covers the TAIEX in his 10-page monthly market letter, The Asian-Pacific Financial Forecast. Learn more here.
Let's rewind the tape to about this time last year. The Taiwanese economy was as big a mess then as now. The central bank projected a six-year low in profits; violent protests broke out against Mainland representatives visiting Taipei; major manufacturers projected multi-year lows in profits; the TAIEX had lost more than half its value over a six-month period; the tone in Taipei was grim, uncertain and tense.
Despite the widespread negativity, EWI's Asia-Pacific market analyst, Mark Galasiewski, had this to say in his November 2008 Asian-Pacific Financial Forecast:
[+] CLICK TO ENLARGE
"The TAIEX is nearing the end of a Wave IV contracting triangle and, therefore, the beginning of a Cycle Wave V to new all-time highs. [The last wave] did indeed make buyers look like fools. [The next wave] should make current sellers look almost as foolish …"
Now take a look at a chart from this month's Asian-Pacific Financial Forecast:
Since the 4089.93 bottom on Nov. 20, 2008, the TAIEX has risen nearly 90%. Bad news, expert opinions and ongoing political one-upmanship across the straits notwithstanding, the TAIEX continues to climb; it doesn't care what's in the news.
The market has a life of its own, regardless of what mainstream commentators say about it. And while the mainstream is scrambling to figure out what's going on right now, EWI's Asian-Pacific Financial Forecast is delivering the charts and the wave patterns that signal what's most likely to happen in the weeks and months ahead.
Where will the TAIEX go from here? Editor Mark Galasiewski regularly covers the TAIEX in his 10-page monthly market letter, The Asian-Pacific Financial Forecast. Learn more here.
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