Even with lackluster GDP growth in the 1%-to-2% range, Taipei-traded equities have held up impressively. The broad market index delivered a 15% dollar-based return in 2016, based on data from MSCI. A key reason is the economic dividend afford by a lower oil price; the island imports its entire hydrocarbon requirement. Taiwan-based companies are also benefitting from accelerating global demand for internet-related devices, both on a primary and outsourced basis. Among other points, Taiwan is a major player in the iPhone supply chain. We expect that East Asian investors will be cautious over the months ahead. They will take a wait-and-see approach to any potential trans-Pacific trade war between Beijing and Washington, trying to understand the impact on Taipei. There may not be enough growth cushion in the economy to withstand those pressures. ■
Learn more at the South China Morning Post.
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Image shows detail at Chiang Kai-Shek Memorial Hall, Taipei. Credit: Perseo8888 at Can Stock Photo Inc.