All eyes on Taiwan
So it happened. Pelosi landed in Taiwan yesterday night.
I am not interested in the political games nor making a stand on either sides. I am more interested in my stocks as an investor.
I gave four reasons why China stocks were down yesterday and it seems like the Pelosi's visit was the key factor in play.
The China ADRs rallied after Pelosi landed in Taiwan. The fear of a military conflict taking place around Taiwan didn't materialize.
Yes, China announced a four-day exercise with live firing but it is still an exercise after all. Not an outright conflict.
Military activities will increase in the region but I think all sides will be careful to prevent escalations. There are two big reasons.
First, China and Taiwan are dependent on each other for economic benefits. China is Taiwan's largest trading partner while China is reliant on semiconductors produced by Taiwan.
Second, a war with Taiwan would have the U.S. involved too. With the two countries having the largest GDP in the world in conflict, the rest are likely to be dragged into the picture too. Russia and Japan could be the immediate parties to be involved and a WWIII may break out as a result.
Hence, the economic benefits are too critical and the consequence of a conflict is too dire. All parties want to avoid war.
But a statement has to be made and we will hear more rhetorics in the coming weeks.
China has launched bans on more than 100 Taiwanese food brands and restricted sand exports. But I don't see much impact to share prices.
Uni-President Enterprises Corp is a major food brand from Taiwan. Its share price was up 0.7% today. Even its China subsidiary, Uni-President China $U-PRESID CHINA(00220.HK$ was down just 0.7%.
Want Want China $WANT WANT CHINA(00151.HK$ , another Taiwanese food brand in China, saw its share price down by 0.6%.
The broader stock indices were treating this as a non-event too. Shanghai, Shenzhen, Hang Seng and Taiwan stock indices moved within a percent.
It is not over yet and we can expect more measures to be imposed by China, which still could result in some volatility in the markets.
For now, we can breathe a sigh of relief.
I am not interested in the political games nor making a stand on either sides. I am more interested in my stocks as an investor.
I gave four reasons why China stocks were down yesterday and it seems like the Pelosi's visit was the key factor in play.
The China ADRs rallied after Pelosi landed in Taiwan. The fear of a military conflict taking place around Taiwan didn't materialize.
Yes, China announced a four-day exercise with live firing but it is still an exercise after all. Not an outright conflict.
Military activities will increase in the region but I think all sides will be careful to prevent escalations. There are two big reasons.
First, China and Taiwan are dependent on each other for economic benefits. China is Taiwan's largest trading partner while China is reliant on semiconductors produced by Taiwan.
Second, a war with Taiwan would have the U.S. involved too. With the two countries having the largest GDP in the world in conflict, the rest are likely to be dragged into the picture too. Russia and Japan could be the immediate parties to be involved and a WWIII may break out as a result.
Hence, the economic benefits are too critical and the consequence of a conflict is too dire. All parties want to avoid war.
But a statement has to be made and we will hear more rhetorics in the coming weeks.
China has launched bans on more than 100 Taiwanese food brands and restricted sand exports. But I don't see much impact to share prices.
Uni-President Enterprises Corp is a major food brand from Taiwan. Its share price was up 0.7% today. Even its China subsidiary, Uni-President China $U-PRESID CHINA(00220.HK$ was down just 0.7%.
Want Want China $WANT WANT CHINA(00151.HK$ , another Taiwanese food brand in China, saw its share price down by 0.6%.
The broader stock indices were treating this as a non-event too. Shanghai, Shenzhen, Hang Seng and Taiwan stock indices moved within a percent.
It is not over yet and we can expect more measures to be imposed by China, which still could result in some volatility in the markets.
For now, we can breathe a sigh of relief.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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