For many stock investors in Taiwan, one of the crucial questions they have been asking following the recent share plunges is: Should we take a profit from our equity investments before the Lunar New Year or maintain our portfolio holdings unchanged throughout the holiday?
To sell or to hold? That is the question among investors because any changes that may happen during the Lunar New Year holiday — the longest in the Asia-Pacific region — would be a risk to their equity investments.
History suggests that when the market is to close for several days, investors are likely to reduce stock holdings regardless of whether they receive the positive news they may have been expecting. This year, the local stock market will be closed from Thursday until trading resumes on Feb. 22.
In the past week, the benchmark TAIEX fell 427.57 points, or 5.60 percent, to 7,212.87. So far this year, the index has dropped 975.24 points, or 11.91 percent. The share plunges were in contrast with a series of positive economic data released by the government recently, as well as announcements by several technology firms in the past two weeks that they swung into black in the final quarter of last year from a year ago, a sign that the nation has left behind its worst recession in decades.
It is possible that investors were overreacting to negative news following declines in global stock markets. The message from the recent selling spree in local shares suggests that the global recovery is not firm and that problems within some advanced economies are weighing on investors’ minds.
Last week, it was all about the sovereign debt problems in Spain, Greece and Portugal. While the debt default problem is still brewing in Greece, a big worry is that whether the problem in Greece will spark similar developments in other deficit-hit European countries and then trigger a contagion effect in the whole of the euro-zone economy.
Moreover, soaring government debt also reminds us of the unwelcome consequences of government fiscal and monetary policy support over the past two years.
While those stimulus efforts appear to have helped avoid a double-dip recession, their implementations led to problems such as overcapacity in some sectors, potential new asset bubbles and bad loans.
In Taiwan, asset bubbles and high unemployment remain concerns. Notwithstanding this, last week the Ministry of Economic Affairs unexpectedly revoked a recapitalization registration of a Far Eastern Group subsidiary dating back to 2002, which cast doubt on the group’s control of the profitable Pacific SOGO Department Stores. This, in turn, has had a snowball effect on the main bourse.
With concerns that the group’s three main units — Far Eastern New Century Corp, Far Eastern Department Stores Ltd and Asia Cement Corp — may face a regulatory order to suspend share trading on the main bourse, investor confidence will remain shaky.
Therefore, during the remaining four trading sessions before the Lunar New Year holiday, it looks like few investors will choose to go against market sentiment. Bear in mind, however, that a major characteristic of the current market is that nobody is taking anything for granted.
Whenever we think the worst is over, a new threat emerges somewhere else to sow fear and uncertainty.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
In an article published on this page on Tuesday, Kaohsiung-based journalist Julien Oeuillet wrote that “legions of people worldwide would care if a disaster occurred in South Korea or Japan, but the same people would not bat an eyelid if Taiwan disappeared.” That is quite a statement. We are constantly reading about the importance of Taiwan Semiconductor Manufacturing Co (TSMC), hailed in Taiwan as the nation’s “silicon shield” protecting it from hostile foreign forces such as the Chinese Communist Party (CCP), and so crucial to the global supply chain for semiconductors that its loss would cost the global economy US$1
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
Sasha B. Chhabra’s column (“Michelle Yeoh should no longer be welcome,” March 26, page 8) lamented an Instagram post by renowned actress Michelle Yeoh (楊紫瓊) about her recent visit to “Taipei, China.” It is Chhabra’s opinion that, in response to parroting Beijing’s propaganda about the status of Taiwan, Yeoh should be banned from entering this nation and her films cut off from funding by government-backed agencies, as well as disqualified from competing in the Golden Horse Awards. She and other celebrities, he wrote, must be made to understand “that there are consequences for their actions if they become political pawns of
RSS