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Stock Ideas Investors Daily Edge Taiwan’s Backyard Just Got Bigger
Stock Ideas Investors Daily Edge Taiwan’s Backyard Just Got Bigger 
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| Taiwan’s Backyard Just Got Bigger |
| Tuesday, 01 April 2008 | ||||||||
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Big things are happening in China. But it’s not mainland China. It’s the “other China” – The Republic of China (or Taiwan). Relations have been frosty between the two. Mainland China doesn’t recognize Taiwan as an independent country.  Taiwan, in turn, is nervous about being swallowed up by mainland China.Last week Taiwan elected a new president - Ma Ying-jeou. And he’s promised to pursue closer ties with China. He wants to allow direct flights between mainland China and Taiwan, and to remove investment limits on Taiwanese companies wishing to invest in China. The Taiwanese market went up on the news of the election. It may fall back a bit once some of the initial euphoria wears off. But it should give the sluggish Taiwanese economy a boost. One way to play the Taiwan market is to invest in the ETF, EWT (iShares MSCI Taiwan Index). A less conservative way with more upside is to invest in one of the country’s stronger companies. Chunghwa Telecom (CHT) certainly qualifies. It was going up before the election and it’s still going up. As you can see, over the last half year it’s done much better than the S&P 500. Chunghwa used to be Taiwan’s government-owned telecommunications enterprise. Now it’s mostly privately owned (the Taiwanese government owns a minority stake). But it still controls the lion’s share of Taiwan’s telecommunications across the board. Only in wireless does its share fall under 50 percent – at 36 percent. But that’s still bigger than the share of its two main competitors. I’ve been following the company for a while. I used to have it in one of my portfolios. Now it’s really coming into its own. But the real frosting on the cake is China. Under new President Ma, there’s every reason for Chunghwa to seek investments and tie-ups in China. With its experience and technology, it could do incredibly well there. And the Chinese companies it hooks up with would be huge beneficiaries. It hasn’t happened yet. But I’m betting it will. Chunghwa’s brightest future is in China. And that’s one more reason to invest in them. P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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