Signup for our free newsletter:

Taiwan and China Relations

Written By Brian Hicks

Posted March 22, 2008

Welcome to Wealth Daily’s new weekend review. Each week we’ll take a look at the week that was and what’s ahead, along with what you may have missed from our free sister sites, Gold World, Energy and Capital, and our free blogs. Enjoy.


For years, China stocks have raged as Taiwanese stocks fell by the wayside. Following the tech bubble implosion early in the decade, Taiwan has significantly lagged Asia and most emerging market runs. You can thank Chen Shui-bian’s leadership for that.

But after eight confrontational years with China, Taiwan’s economy may finally get the shot in the arm it so desperately needs on Saturday. In a move that could catapult Taiwanese stocks and its economy, 17 million voters will choose between Frank Hsieh (Democratic Progressive Party) and Ma Ying-jeou (Kuomintang party, which has dominated Taiwan politics for more than 50 years) as their next president.


EWT chart


It’ll be a welcome economic change when Chen Shui-bian of the Democratic Progressive Party is shown the exit door. After eight years in office, he’s still unpopular, constantly hit with allegations of corruption and his mishandling of a suffering economy.

While Hsieh’s Democratic Progressive Party favors independence from China, he’s promising to resume talks – a move referred to as part of a "dirty trick" to bring in more votes.

But unless there’s an election surprise, Ma should win. And with a belief that Taiwan could achieve an annual growth rate of 6% with a 3% reduction in unemployment by 2012, and hopes of stronger trade and economic ties with China, Taiwanese stocks have nowhere to go but up. Ma is a pro-business candidate with a favorable view of relations with China.

Speculation on a Ma win has already brought new money to Taiwan. The MSCI Taiwan Index, for example, has already gained more than 10% since February with further upside potential.

It’s likely we’ll see a significant "catch up" rally when all is said and done.

Imagine what’ll happen to the EWT and Taiwan stocks if all goes according to plan. According to the Wall Street Journal, "Taiwan stocks may be cheap, trading at 16 times reported earnings vs. 19 times for Hong Kong shares and 22 times for overseas-listed China stocks . . ."


For the week of March 17, 2008, here’s what we covered in Wealth Daily and elsewhere.

Oil Drilling in the ANWR: Can Arctic Oil Satisfy U.S. Demand?
Although attempts to drill in the Arctic National Wildlife Refuge (ANWR) have failed in the past, another piece of legislation has reached the U.S. Senate to tap its resources. This time, drilling would be permitted if oil prices reach $125 a barrel.

Canadian Oil Production: Setting Up for a Flood of Canadian Oil
When we’re talking about Canadian crude flowing to the U.S., there are two specific places investors should focus on. Over the next few years, nearly three million barrels of oil per day from the Alberta oil sands will be flowing into the U.S. (Canada estimates production will reach 2.7 million barrels per day by 2015). Granted, extracting and upgrading the heavy bitumen is an energy-intensive process. But as technology improves, that process will become more efficient. Believe me, if companies were able to stay around throughout $20/bbl oil, they’ll thrive when oil hits $120 a barrel.

Clean Energy Technology: Why Bill Gates Is Missing the Green Point
Bill Gates knows that Microsoft is an international company, and he knows he needs Congress’s help. But as he meets with D.C. insiders this week, Gates is emphasizing more work visas for infotech geniuses, overlooking the key to Silicon Valley’s continuing prosperity–clean energy technology.

And The Fifth Top Economic Advisor Is: They’re Kidding, Right?
Yep, if you read today’s news, you were as shocked as I was. USA Today is recognizing Lawrence Yun for his "economic forecast accuracy."

Gold Takes a Header: Commodities Spend the Day in the Red
With the stunning collapse of Bear Stearns and the Fed’s latest move to include investment banks under its umbrella, a total systemic financial collapse has now likely been averted. And with the latest Fed statement ratcheting up the tough talk on inflation, the dollar may now be close to the point where it will actually be defended.

The Bear Stearns Collapse: Fifth Largest Bank Bought for $2 . . . Who’s Next?
"Ian, I’m holding a long position in Bear Stearns, and am a bit put off by your recommendation to avoid it along with other banking institutions. The CEO just said the company was okay, and Jim Cramer said, ‘Bear Stearns is not in trouble. If anything, they’re more likely to be taken over. Don’t move your money from Bear.’ What do you have to say about that, tough guy?"

The Bear Stearns Meltdown: Meltdown, Schmeltdown, It’s Time to Go Long
The Bear Stearns meltdown wasn’t the beginning of the end, but the end of the beginning. The next phase, in all likelihood, would be a market that would begin to regain its footing. The Bernanke playbook, in other words, was hitting its final strides.

MF Global Stock: After Bear Stearns News, One Financial Jets 60% Higher
It was 2001 when severe political and economic crises stripped 50% off the Turkish lira as hundreds lost their jobs. But had you bought the "crisis" opportunity, buying shares of strong but beaten-down companies, you’d have made a small fortune. Turkcell, for example, plunged from $24 to $1.50, only to recover to $16.52 following the crisis.

That’s it for this week. For more, visit your free,, and

Have a great weekend,

Ian L. Cooper