Taiwan, Asian markets see no instability after elections
The Eastern Theater Command of the People's Liberation Army published a video of some of its military vehicles engaged in naval maneuvers, without giving details on the location and date of the images. The timing of 48 hours before the presidential and legislative elections in Taiwan may not be coincidental, but in reality so far Asia does not seem to believe in the risk of war, despite the victory of the pro-independence Lai Ching-te in the presidential elections.
However, a lame victory, that of the most disliked candidate in Beijing, given that Lai will not have the leadership of the parliament where his Democratic Progressive Party (DPP) lost its majority after eight years of dominance in both the executive and legislative branches. An element which could also indicate greater patience on the part of Xi Jinping, who could try to leverage the political fragmentation within the Taiwanese scene.
Perhaps it will be by taking these elements into account that i Taiwanese and Asian price lists they were not at all affected by Lai's victory, showing that they do not believe that the electoral result could lead to dramatic changes in the short term. Taiwan's stock market largely shed post-election uncertainty on Monday, with the benchmark index (.TWII) rising about 0.5%.
Analysts expected one potential downturn in Taiwanese stocks this week, after a 25% increase in just over a year, as the lack of a parliamentary majority could complicate Lai's spending plans. However, analysts believe the Taiwan dollar could outperform after election volatility stabilizes. “The market is likely to return to focus on fundamental factors, such as improved chip sector prospects and lower global yields, which are likely to boost foreign flows and be supportive for the Taiwan dollar,” Citi said in a note .
The stability factor chips. Businesses ask Lai to dialogue with Beijing
However, Chips can play a role in partial stabilization on the Strait. It is no coincidence that in his first speech as president-elect, Lai referred precisely to the role of the semiconductor industry, with Taiwan accounting for over 60% of the global share of the manufacturing and assembly sector. “As president, I will continue to support the development of the semiconductor industry, from materials, equipment, research and development, integrated circuit design, manufacturing, wafer fabrication and testing, for the industry to build a complete cluster and promote its development in Taiwan. This will naturally also benefit the global economy,” Lai said.
A rather clear reference to the alleged “silicon shield” that could protect Taiwan from strategic turbulences. Calling the Taiwanese industry “the common good of the world,” Lai said Taiwan has a responsibility to ensure that the global community can also benefit from its advantage in chip manufacturing. “The progress of the industry is the result of the division of labor around the world. Not only must Taiwan cherish its achievements, but China and other countries must also cherish this industry.”
Also pay attention to the role of the Taiwanese business world, which really cares about relations with Beijing, which on the other hand is Taiwan's main trading partner with the balance also unusually tipped on Taipei's side. Taiwanese companies operating on the island and even more so those present in mainland China have urged the DPP government to review its policies relating to cross-Strait relations.
Hours after the announcement, Lee Cheng-hung, president of the Mainland Taiwan Investment Firms Association, told Taiwanese news agency CNA that it is “necessary to change” policies defined as “wrong and inappropriate”because only through close exchanges and cooperation between the two sides across the strait can mutual peace and stability prevail.
In a more subdued way, but similar indications also came from within. Hander Chang, general secretary of the Science and Industry Association of Taiwan Science Park, based in Hsinchu, the capital of semiconductorssaid that although Taiwan's trade dependence on the Chinese market has decreased in recent years, Beijing remains an important destination for exports of Taiwanese goods.
Chang added that a sharp cooling of cross-Strait relations is not in Taiwan's interest, stressing that all sectors believe that Taiwan should resume cooperation with mainland China as soon as possible after the elections. Also Frank Huang, president of the giant Powerchipexplained that “Taiwan cannot fully rely on the United States” but “should deal with China and maintain cross-strait peace.”
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