Better Taiwan-China relations ahead

On March 22nd, Taiwan held presidential elections and the Kuomintang (KMT) party candidate, Ma Ying-Jeou, won with 58% of total votes against 42% for his opponent, Frank Hsieh. The winning margin, totaling over 2 million votes, was higher than expected although the KMT party was expected to win. The new president takes office on May 20th and we can now expect much better relations between Taiwan and China. Mr. Ma plans to launch regular direct charter flights between China and Taiwan starting July. A number of other barriers between Taiwan and China are expected to fall. For a more detailed discussion of the potential changes, please see Red Cat Journal’s previous article on Taiwan’s elections. The Taiwan stock market has already outperformed global markets by a wide margin year-to-date. Whether the outperformance continues will depend on the speed and magnitude of the changes Mr. Ma introduces and the receptiveness of China to Mr. Ma’s overtures. It is quite possible that after the recent outperformance, the Taiwan stock market may take a breather as investors reassess the impact to Taiwan’s economy.