After the election

Cheming Yang

The presidential election frenzy in Taiwan is finally over before the Chinese new year holidays. The incumbent President Ma got re-elected as most predicted. However, not without a fierce fight. The opposition from the Democratic Progressive Party is quite impressive. With the campaign dragging on for over half a year, the economy in Taiwan almost stalled as reflected from the rise and fall of the stock market.

The weighted index of Taiwan stock exchange fell 20.9% in the rabbit year. No doubt, the major downer is the European sovereign debt crises. In the 2008 financial crises, the stock market fell around 45%. Compared to the 2008 scare, the one fifth decrease might not seem to be that big a deal. However, we need to ponder why this has happened. Is it simply caused by the European debt crises or is there other factor in play?

The uncertainty caused by the presidential election is certainly a major factor. Now that the election is over, the uncertainty is gone. Will we see a surge in the stock market? Short term surge for sure. How about the yearly trend? Will we see a net gain or a net loss in the end of dragon year? My prediction is that we will see a minimal net gain, but the over all prospect is not particularly good. How so? Even though the political factor is out of the picture, in order to boost economy, we need to have money making production. Where can Taiwanese make money at this moment? With the display, solar and DRAM industries in deep trouble and the housing bubble looming in the background, a lot of the upward efforts will be offset by these negative factors.

Politics is not a money making business. With politics aside, we need to find out what exactly are the things that we can depend on to make a living. Although there is high hope for the full implementation of ECFA, Taiwanese still need to come up with competitive products that can sell across the strait and around the world. Not to mention the extent of growth should be able to compensate for those money losing businesses. As such, this year is unlikely to reap up major net growth. The coming year is not destined to be winning year per se, but it could be the foundation of future successes if we make the right choices in the dragon year.

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