Despite China jitters, Taiwan stocks soar as investors buy in before election
By Faith Hung and Rae Wee
TAIPEI/SINGAPORE (Reuters) — Taiwan's stock market is soaring ahead of elections next month that will shape relations with China, which claims the island as its own, as investors look past political risk and potential for conflict and bet on success for chipmakers and other exporters.
Foreign investors poured a net $7.6 billion into Taiwan equities in November, a record sum according to LSEG data stretching back to the beginning of 2008. Domestic investors were also net buyers to the tune of $300 million.
The island's benchmark stock index hit a 20-month high on Monday.
Presidential and parliamentary elections on Jan. 13 are happening as China has stepped up its military pressure and denounced leadership frontrunner Lai Ching-te from the ruling Democratic Progressive Party as a dangerous separatist. He says only Taiwan's people can decide their future.
The main opposition party, the Kuomintang (KMT) which traditionally favours close ties with China but denies being pro-Beijing, has pledged to re-start engagement should it win.
Money managers who have long borne the political risk to own Taiwan's technology-heavy equity market say a surprise KMT victory could make for short-term gains by easing relations with China.
They are betting, though, on rebounding profits from chipmaking to power a new leg for a rally that has lifted Taiwan Stock Exchange Weighted Index by 23% this year.
«Lai would not be so stupid as to declare independence after Taiwan's protective big brother, the United States, has expressed clear opposition to the idea,» said Allen Huang, a senior analyst at Mega International Securities in Taipei.
Markets likewise see a conflict as unlikely, even though China has cast the election
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