What Are The Implications Of The Sudden Weakness By Stocks In Taiwan?

Is This Cause For Concern?

It has long been our view that markets are inter-connected, with the actions of one market potentially having important implications for other, seemingly unrelated, markets.

That is why we find the recent weakness of shares in Taiwan worthy of note. Taiwanese shares were setting new highs in April before tumbling more than 10% in the past two weeks.

The abrupt change of trend is surprising given the strong bull market and Taiwan’s position as the leading fabricator of microchips at a time of global microchip shortage.

What can the price weakness be indicating? Are tensions with China set to significantly escalate? Is the global economy on the verge of a major slowdown that will drastically cut demand for microchips? Is the Taiwanese market the “canary in a coal mine” for other stock markets, suggesting that we can expect more general market weakness?

It is the inferences derived from such market action that can provide investors with a competitive advantage and why the consideration of international markets and geopolitics is included in each issue.

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