Johnc

iShares Taiwan ETF: A Bet on Improved China Relations

The market has outperformed the region YTD in a large part because the KMT (Ma's party) was expected to win. Now that Ma has won, the hard work of rebuilding the economy and restructuring the cross straits relationship begins. I am very positive (and hold EWT) but would warn against anyone expecting a "quick pop". The story will unfold over the next two years. And, when that story does unfold, the front runners will have changed. Taiwan is in the early stages of a transition from a manufacturing led economy to one with a much larger services component. I expect Taiwan's economy to look much more like Hong Kong's or Singapore's than South Korea's in two to three year's time. EWT will participate but may lag behind a better constructed portfolio of Taiwan stocks.