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英文财经 |
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The "Other China": The Next Major Stock Market Boom |
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星期四, 七月 10, 2008 08:42:01 |
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Nicholas Vardy |
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With Asia, Europe and even the United States in confirmed bear markets, it's becoming increasingly harder to find global stock markets with bullish prospects. But thanks to the election of a new president who has undertaken steps to reconcile with "Big Brother" China across the strait, Taiwan is one of the handful of global stock markets that could rally strongly between now and the end of the year.
The Other China: A Historical Primer
In many ways, Taiwan is the success story that mainland China could have been -- absent the millstone of Communism. While most resource-rich countries like Brazil and Russia pump finite natural resources out of the ground to turbocharge their economies, Taiwan accumulated its breathtaking $291 billion in foreign currency reserves -- the third highest in the world -- the old fashioned way. Taiwan earned it. Had mainland China (population: 1.3 billion) been as efficient as tiny Taiwan (population: 23 million) in hoarding dollar reserves, China's reserves would stand at $12.6 trillion -- almost equivalent to the size of the entire U.S. GDP.
Taiwan's secret? A large chunk of the one million Chiang Kai-Shek supporters who fled to Taiwan in 1949 were bourgeois Chinese -- governing elites, merchants, Chinese capitalists, and well-educated professionals. American aid -- which constituted more than 30% of domestic investment throughout the 1950s and early 1960s -- helped, too. Although the United States never established official diplomatic ties with Taiwan, American-inspired land reform, aid and investment and free universal education helped bring the Taiwanese economy into the 20th century. Thanks to a combination of hard work, a market economy, and a little help from the United States and, voila, in 50 years, Taipei boasts the world's tallest building and Taiwan's high-tech industry rivals that of the Silicon Valley.
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The Other China: Politics Catching Up to Business?
Investors' sticking point with Taiwan has always been its relationship with China. Because China has never renounced its right to "reunify" Taiwan, Chinese military action hangs like a sword of Damocles over Taiwan's head. Just two years ago, China's legislature passed an anti-secession law authorizing military action against Taiwan if it moves toward independence.
But the political mood between Taiwan and mainland China recently has improved dramatically upon the election in Taiwan of a pragmatic new president Ma Ying-jeou. Within three months of his election, direct flights between China and Taiwan had resumed for the first time since 1949. Taiwan also agreed to allow 3,000 Chinese tourists to visit Taiwan every day. As a sign of the new detente, mainland China halved the number of 700 missiles it has pointed at Taiwan.
Of equal importance, the Taiwanese government has several proposals on the table to loosen restrictions on Taiwanese companies investing in mainland China. Foremost among these are efforts to allow Taiwan's financial industry to participate actively in the increasingly important mainland Chinese and Hong Kong markets. Under the government's new proposals, Taiwanese brokerages would be allowed to invest in their Chinese peers; Taiwanese mutual funds would be able to buy Chinese and Hong Kong stocks; institutional investors backed by Chinese capital would be able to invest in the Taiwanese market; and Hong Kong-listed companies would be able to seek second listing in Taiwan. Finally, banks would be able to exchange renminbi for the local currency to facilitate Chinese travel to Taiwan.
Yet for two sworn political enemies, Taiwan and China could have been hardly closer already. It's almost as if the Chinese and Taiwanese business and political communities have been existing in parallel, non-overlapping universes. Mainland China is already Taiwan's number one export market, with nearly 40% of its exports going to China. Trade between mainland China and Taiwan is already expected to reach $120 billion this year. And formal investment restriction notwithstanding, mainland China has attracted more than two-thirds of Taiwan's foreign investment, with Taiwanese companies having invested more than $120 billion in mainland Chinese businesses since the early 1990s. More than 70,000 Taiwanese firms have set up on the mainland and Taiwanese companies employ some 10 million people in China. More than 300,000 Taiwanese businessmen and their dependents now live in the greater Shanghai area alone.
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The Other China: Boom to Bust... Ready to Boom Again
Between 1987 and 1990, Taiwan had one of the greatest stock market bubbles in history. Taiwan's market rose from 1,100 to 12,054 -- an almost 11x gain. With the Taiwanese currency rising another 40% against the U.S. dollar, foreign investors who got in early made 14 times their money in just three years. At that bubble's peak, the top banks in Taiwan had a market value greater than the entire U.S. banking system. Like all financial manias, it ended in tears. Since 1990, Taiwan's stock market has been the worst-performing major stock market in the world, except for Japan. On July 4, the index stood at 7,228. That's a fall of more than 40% from 1990 levels. While Asian markets have just about doubled since January 1, 2000, Taiwan's stock market actually declined 21% since the turn of the millennium.
All of this has made the Taiwanese just about as cheap as it's ever been. In fact, it may be the only market in all of Asia that is trading at a discount to its historic valuations. Investment guru Jim Rogers has sold out of all emerging market stocks -- except for Taiwan and China. But even the cheapest markets can remain cheap for decades without a catalyst. And the recent reconciliation between Taiwan and China could just be what the market has been waiting for. Over the longer term, mainland Chinese Communist party leaders assume that the incorporation of Taiwan into the People's Republic of China is inevitable. A plan published by the Ministry of Communications in 2004 makes plans for a highway from Beijing to Taipei, Taiwan, to be completed by 2030. The technical challenges of crossing the 94-mile Taiwan Strait aside, the document fails to address the even bigger political problem of reaching an agreement with Taiwan. But with Chinese officials' assuming that Taiwan's reintegration into China is a question on of "when" and not "if," the same can be said for a huge stock market rally in Taiwan.
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文章来源：MoneyShowAsia.cn |
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