Taiwan's sovereignty rating is likely to be upgraded to "stable" from "negative" should there be a smooth election with stable relations with China, ratings firm Standard and Poor's (S&P) said yesterday.
"A smooth completion of the presidential election in March, in which no major cross-strait tension arises, could result in the outlook reverting to stable," S&P analyst Tan Kim-eng (陳錦榮) told a teleconference after being asked whether there was a chance for an upgrade in Taiwan's rating after the March poll.
In an e-mail to the Taipei Times, Tan said the key worry was cross-strait uncertainties during the election period.
"This particular risk we are concerned with will be resolved one way or another after March and a conclusion is likely to be made very soon after that," he wrote.
"The risks of Taiwanese politicians stirring up cross-strait tensions could ease after the March 2008 presidential elections -- even if the leading pan-Green party, the Democratic Progressive Party (DPP), continues to control the executive arm," S&P said in an report titled Politics and Policy Environment: Credit Constraint for Many, Support for A Selected Few in Asia-Pacific.
The report said that as people were disenchanted with politicians' inability to reinvigorate the economy, the election was closely tied to economic growth and the nation's ability to generate employment.
"However, should domestic politics once again threaten to destabilize cross-strait relations, risks to the credit ratings will rise," the report said.
Taiwan's very strong net external asset position and the government's effort to improve its fiscal health and restrain budget spending has supported its creditworthiness and mitigates weaknesses elsewhere in its credit quality, Tan said during yesterday's teleconference.
However, the rating will remain unchanged at "AA-/A-1+", he said.
In a separate report on the dilemmas central banks are facing between easing monetary policy to support economic activity and tightening money supply to combat inflation, Tan favored prudence rather than stimulation now and suffering later.
"Despite the short-term costs, central banks that respond with prudent monetary policy changes will help to bring about the important benefit of anchoring inflation expectations," he wrote.
He said cautious monetary measures would help stimulate financial and economic development, which would benefit sovereign credit rating fundamentals.
"These benefits include more financing options for the government, accelerated development of domestic capital markets and improvements to economic growth potential," Tan said.
"The determination of central banks to fight inflation will preserve or strengthen the credit ratings of their respective governments," he said.
HANDOVER POLICY: Approving the probe means that the new US administration of Donald Trump is likely to have the option to impose trade restrictions on China US President Joe Biden’s administration is set to initiate a trade investigation into Chinese semiconductors in the coming days as part of a push to reduce reliance on a technology that US officials believe poses national security risks. The probe could result in tariffs or other measures to restrict imports on older-model semiconductors and the products containing them, including medical devices, vehicles, smartphones and weaponry, people familiar with the matter said. The investigation examining so-called foundational chips could take months to conclude, meaning that any reaction to the findings would be left to the discretion of US president-elect Donald Trump’s incoming team. Biden
INVESTMENT: Jun Seki, chief strategy officer for Hon Hai’s EV arm, and his team are currently in talks in France with Renault, Nissan’s 36 percent shareholder Hon Hai Precision Industry Co (鴻海精密), the iPhone maker known as Foxconn Technology Group (富士康科技集團) internationally, is in talks with Nissan Motor Co’s biggest shareholder Renault SA about its willingness to sell its shares in the Japanese automaker, the Central News Agency (CNA) said, citing people it did not identify. Nissan and fellow Japanese automaker, Honda Motor Co, are exploring a merger that would create a rival to Toyota Motor Corp in Japan and better position the combined company to face competitive challenges around the world, people familiar with the matter said on Wednesday. However, one potential spanner in the works is
HON HAI LURKS: The ‘Nikkei’ reported that Foxconn’s interest in Nissan accelerated the Honda-merger effort out of fears it might be taken over by the Taiwanese firm Nissan Motor Co has become the latest buyout target in Japan as it explores a merger with Honda Motor Co and faces an overture from Hon Hai Precision Industry Co (鴻海精密), known as Foxconn Technology Group (富士康科技集團) internationally. Shares in Nissan yesterday jumped 24 percent, the most on record, to hit the daily limit, after the two Japanese automakers acknowledged that talks are ongoing to better position themselves for competitive challenges during a time of upheaval in the global auto industry. Foxconn — a Taipei-based manufacturer of iPhones, which has been investing heavily in factories to build electric vehicles — has also
CHIP SUBSIDY: The US funding would help alleviate the financial pressure from building two fabs in the US and should lift gross margins in 2026, the company said GlobalWafers Co (環球晶圓), the world’s third-largest silicon wafer supplier, yesterday said it is to receive US$406 million in subsidies from the US Department of Commerce for two new US fabs under the CHIPS and Science Act, with the first batch of the funds likely coming next year. The grant represents 10 percent of the planned investments of US$4 billion in advanced semiconductor wafer manufacturing facilities in Texas and Missouri, GlobalWafers said. The commerce department is to disburse the funds based on the completion of project milestones over a multiyear timeframe, the company said. Along with the tax credit, which is equal to
RSS