Investment diary of Taiwan stock market- 2015.08.31

Never forget the bull power of globalization trend, just because the temporary stock price boost.   

Taiwan, a small country as mentioned in my previous blog posting, is an export-oriented economy country between the world's top three economies such as America, China and Japan. Taiwan is located at the unique geographical place, in front of China and around the rim of the Pacific Ocean. Therefore, America have been put it into an important position of defending communism group which is dominated by Soviet Russia and China. For this reason, Taiwan has been rising up by the help of America since Kuomintang exiled from mainland China. During the progress of its ruling in the following several decades, Taiwan stock market’s bust and boom is obviously interweaves and connects with America’s global policy.

Since 1960s, National Taiwan Sugar Corporation, Taiwan’s largest exchange listed company, had finally delisted from the exchange market although Taiwan only had not even 10 listed company at time. It was because the conflict between America and Cuba. Until 1970s, Formosa Plastics Group have risen and boomed to become Taiwan’s most popular and biggest company due to the issue of oil price rising which caused by the representative war between America and Soviet Russia (Arab-Israeli conflict). Other examples like Taiwan’s wealthiest people in 1980s, the founder of Cathay Life Insurance Company, and other richest people after 1990 were emerging by America’s policy at time. In another words, only when one understands America’s global policy, will he be able to control Taiwan’s economic arteries.

When it comes to late 2001, if one wants to profit from Taiwan stock market, he should understands America had already changed its global policy of rising China to Asia-Pacific rebalance strategy since 1990th. In other words, America has been looking for ways to decline the power of China and strengthen the surrounding countries to against it.

Therefore after 2009, the best way of investing Taiwan stock market is to follow America’s updated policy. The most well-known examples were the rising of (1476) ECLAT and (4401) TLOONG at that period of time. (1476) ECLAT had been boomed at least 100 fold, and (4401) TLOONG at least 20 fold. Our main target between the years of 2010 to 2013 was (4401) TLOONG, which we had profited more than 50 fold from three times of its buying and selling transaction (Because we had issued warrants).

Lately, the main scheme of Taiwan stock market still follows the same direction and expends even more, including the shoe-making industry in Vietnam and other neighboring countries. Therefore, our investment direction should be downstream with the flows. Like (9938) Taiwan PaiHo, another Vietnam manufacturing stock, we also created more than 10 times of profit according to the same method of issuing warrant. This year, we have still been set our primary investment direction in the same way although share prices plunged as the result of China’ stock market crash until this year, August 2015. We just increase more warrants as part of a hedge strategy to avoid China’s crash. Our major profit have sourced from here in the recent months. As far as Vietnam concept stock, we consider it has only been a consolation.

Many financial analysts are busy of proving winning-tips, because the index has rebounded strongly and boomed 8% in recent three days. The winning-tips they proved were no more than the theme, line style or even so-called “severe underestimate”, however they are not enough nowadays. Because Taiwan stock market obviously facing the problems of: 1.The power of globalization trend 2. Taiwan's position at the global financial market.

What is called “the power of Globalization trend” (we have mentioned previously)? It is the power of America’s dominant policy. In additional with China’s wrong strategy in the reaction time, these faults have been made and caused irrevocable mistake. So, China’s remedial action is only tackling the problem on the surface. The truth is its hopeless economic crash. It’s useless by any help, but only some delay of time. It is the same as the earlier situation of Japan. China could never go back to the years of RMB depreciation. So far we know it will cause the result of economy continually falling. As for IMF, it said that just the short-term birth-pains. However, China is unprepared for the consequences of fighting against America due to the problem of arrogant in the past days. Although they could learn from Japan’s lesson, but still hopeless. In another hands, we can see how strong America is.

Next, Taiwan has also grown dependent on China in recent years. It leads to the second inevitable injury to the economy. Even Hillary could obviously see the weakness of Taiwan, but the rulers’ nationalism and self-benefit however bring destruction on itself as the candle moth flies into the fire. Although Taiwan is a small country with a population of only about twenty million people, it still finds difficult to turn the situation around. Even if Foxconn cannot escapes the tough circumstance of sell off from the foreign investors, how about a country. Financial supervision’s effect may be useless, because the ruling leader never wants to change his mind.

From the example of (2454) MTK, we would know what’s called “useless”. (2454) MTK is not even move a bit in the recent rebound. It has only raised one NT dollar from the lowest closing price 3 days ago. The same as (6244) Motech, it has no reaction at all to the few hundred points index recently. I see many China’s concept stocks are almost the same. You may have said three days of consideration is too short. But if you take look of the globalization trend’s profitable stocks I pinpointed previously, you could obviously recognize its positive potential. They have been rising at an appropriate speed before the great rebound. The falling of (2454) MTK and China’s stock market has no business with them.

   The situation nowadays still is to know how to profit from the power of globalization trend and avoid in any loss. The arbitrage operation is the most important strategy that we have been talking about in recent days. Never forget the power of globalization trend (the global dominant power of America) just because the present situation of rebound.

To be continued….