Could Now Be The Time To Invest In Taiwan?

Taiwan's capital, Taipei

Taiwan has been relatively well-insulated against COVID-19, with less than 450 cases and just seven deaths reported according to the most recent count.

Of course, many experts suggested that this outcome may have been the result of Taiwan’s painful experience with SARS, which helped to inform the government’s response and enable the nation’s citizens to avoid the worst of the fallout.

Interestingly, this is also laying the foundations for Taiwan’s President, Tsai Ing-wen, to build a better nation in the coming years with a clear focus on progressive social and economic reforms.

Taiwan – now and in the future

Thanks to Taiwan’s pandemic response and the fact that the government hasn’t been required to implement any quantitative easing measures, the nation’s currency has also performed exceptionally well of late.

In fact, the Taiwan dollar has undoubtedly continued to over-perform throughout May, with the benchmark equity index advancing for three consecutive days towards the end of last week.

Most notably, the currency has risen marginally against the US Dollar during this time, showcasing continued resilience and almost unprecedented growth in the process. This is positioning the Taiwan dollar as a popular option amongst currency investors, creating a significant increase in capital inflows both domestically and from overseas.

At the moment, this relative strength of the currency is also aiding the economy in different ways. More specifically, Taiwan is a nation that remains heavily reliant on exports, particularly semiconductors, consumer electronics and automobile parts, and the recent gains made by the dollar have enabled companies to optimise price points without compromising on the overall levels of demand.

So, is now the right time to invest in Taiwan and the Taiwan dollar?

In many ways, the sustained growth of the Taiwan dollar and the country’s economy is even more impressive when you consider the ongoing geopolitical tensions between China and the U.S.

Make no mistake; Taiwan has recently become central to these tensions, with China pushing hard to reunify with the island nation and US President Donald Trump looking to politicise this conflict to his own advantage.

Fortunately, the Taiwanese economy and its core assets are well-versed in the art of stabilising during key conflicts, and this is yet another argument in favour of investing in the country’s currency sooner rather than later.

However, one potential concern may exist in the form of rising export prices, as while they’re ideally balanced for now, they’re likely to increase incrementally as the Taiwan dollar strengthens and its value continues to soar.

This could create a scenario where Taiwan’s exports are effectively priced out of the market, particularly in an economic climate that is only just beginning to recover from the COVID-19 outbreak.

Should this trend be sustained over a period of time, the Taiwanese economy is likely to suffer whilst the value of its core assets fall.

In this respect, individuals may only have a limited window in which to invest in Taiwan and the dollar, so making a financial move now may actually be the best course of action.

Editors note: this is a guest piece submitted by eleventenths.com

Opinions and suggestions contained within are those of the writer, and do not reflect in any way official policy of The Taiwan Times.

Mark Buckton

Mark is a journalism vet of 20 years with most of those years spent in Tokyo, Japan, as a columnist for The Japan Times and numerous other publications. His work has appeared on CNN, in the BBC, NPR, and in several dozen other media forms and publications across five continents.