Ma save us! The stock market hit a 16 month low yesterday (pic above from Yahoo) as the brilliant financial policies of the rational Ma administration once again boosted our economy. Wait, did I write that wrong? Sorry, for a moment there I thought I was writing for one of the financial papers that pushed Ma so hard during the run-up to the election. Maddog sent me this pic....
...showing how regional bourses have fared since May 20th. Guess who is doing the worst...Don't get me wrong. I don't think our fall here has much to do with the actions of the Great Savior. It's just that, before the election all we heard was how bad the stock market was thanks to DPP President Chen Shui-bian, who, as the Source of All Evil©, caused the stock market to fall, the globe to warm, and a comet to wipe out the dinosaurs. The local pro-Blue papers, as well as international economic and financial magizines and other media were constantly pushing this line. Nobody ever put the Taiwan market in the context of global trends or asked whether its performance might be related to its speculative nature, the lack of good reporting by local conglomerates, the lack of shareholder responsibility on the part of corporate managers, and other endemic problems with corporate behavior here. Nope. The DPP was The Problem.
Maybe next time around these guys will take a more thoughtful line.
Yeah, right.
[Taiwan]
Mike,
ReplyDeleteI agree completely with your main point. I am writing my final economics paper on that topic ... on the myth of the 'economic downturn' as electoral strategy. The yahoo graph is really interesting because, and i may be reading into this what i wish to see but, it seems that the increased volume of criticism about the DPP's handling of the economy in the five months prior to the election actually caused the Taiex to decline reflexively. Even my KMT free market stalwart econ prof agreed that an economy can be talked down as much as it can be talked up ... so they talked it down when it was up and now they're talking it up when it's down.
PP's handling of the economy in the five months prior to the election actually caused the Taiex to decline reflexively.
ReplyDeleteor largely pro-KMT fund managers shoved it down. I've heard that rumors abound in the analyst world that the big downturn after Chen was elected in 2000 was an orchestrated event.
But I agree, it is a good idea. Let me know, I'll put it up here.
Well, if the markets believed in Ma's campaign promises, then we would at the very least see a less severe decline more inline with worldwide declines rather than the race to the bottom that we've seen. Remember that stocks are bets on the future (which Michael rightly points out is tied to the futures of others like Japan and the US).
ReplyDeleteThere's nothing to blame on the DPP here. Markets are memory-less and always forward looking.
From a technical standpoint, triple bottoms rarely and could possibly say never occur. Result? We're heading further down.
ReplyDeleteExcept Taiwan stock was going no where last few years when rest of the world's markets are going up. Taiwan stock market is the easiest one to short if you are like of Jimmy Rogers (the big players). Btw, I want a recession in the US, because it is the only way to fix today's inflation pressure and get rid of some excesses.
ReplyDeleteBtw, I am unloading my SKF to cash and will keep my SDS position.
The stock market is very volatile and its short-term movements often have no connection with actual economic fundamentals.
ReplyDeleteFor those who have not yet retired and intend to be buyers rather than sellers of stocks in the short to mid-term, this is good news. Buy quality companies now, while they're cheap!
The same goes for US companies right now. It's been seven years since we've seen so many good bargains.
The orchestration was almost unbelievable how the media made such a huge issue of the poor economy before the election and then immediately following the election the issue vanished and was replaced with the eoncomic miracle that is (or will be) Chinese tourists. Notice how the news now focuses closely on China and largely ignores other geographic areas of economic opportunty. And the same ones who were condeming A-Bian over poor economic performance have turned into apologists making sure everyone knows that Ma is merely a victim of global economic circumstances.
ReplyDeleteMy wife is completely consistent: she blamed Chen before and now blames Ma. No amount of explaining that the President can't control the economy or stock market will sway her.
ReplyDelete"or largely pro-KMT fund managers shoved it down. I've heard that rumors abound in the analyst world that the big downturn after Chen was elected in 2000 was an orchestrated event."
Yes, because fund managers love to have markets go lower.
Taiwanese stocks are very political because of the retail investors and the not-so-trivial political risk of China attacking Taiwan