Taiwan election a relief for world markets, concern for local investors
By Tom Westbrook and Ankur Banerjee
SINGAPORE (Reuters) -Taiwan's election could allay global concerns about the island's relations with China, while prompting a light selloff domestically on Monday as investors worry the result could hinder economic policy.
Vice President Lai Ching-te won the presidency on Saturday, the third consecutive term for his ruling Democratic Progressive Party (DPP), but the party lost its parliamentary majority, complicating Lai's spending plans and any intent to take an aggressive stance on China.
China, which claims Taiwan as its territory, had called Lai a separatist and «troublemaker through and through», but took a gentler tone after the election, not mentioning him by name and saying the results revealed the DPP «cannot represent the mainstream public opinion» on Taiwan.
Analysts expect Taiwan's stock market to take a hit this week as the spectre of policy paralysis fuels selling in a market that is up 25% in little more than a year.
Yet the outcome is also a relief for investors who had feared the hawkish Lai would push for Taiwan's formal independence, something he has denied. Investors have worried about a hostile reaction from China and a chain reaction of sanctions that could cripple the global semiconductor industry.
“I would imagine the reaction is negative. The market could read weak government in Taiwan, lots of external risks from the mainland and lots of internal risks, because there is no control of the legislature," said Alicia Garcia Herrero, chief economist Asia-Pacific at French investment bank Natixis in Hong Kong.
But Herrero's says Lai's «balanced» victory speech and the stalemate in parliament are reasons China may not react.
«If China does nothing, maybe the
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