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Takeover Fever Hits Taiwan

|Includes: iShares MSCI Taiwan Capped ETF (EWT)

Regular readers of this letter are well aware of my aggressive recommendations to buy emerging markets China and Taiwan. Now you have another reason to buy both. The Middle Kingdom’s China Mobile (NYSE:CHL), the world’s largest cell phone company, bought 12% of Far Eastone Telecommunications (4904.Taiwan). Although a small deal, it represents the first ever direct investment by a mainland company in the rebellious former province. The move could trigger a takeover binge by big Chinese companies of their offshore cousins. It was only a few years ago Taiwanese businessmen were arrested for just visiting, let alone investing in China, which they have done in a major way for 30 years. The iShares MSCI Taiwan fund ETF (NYSEARCA:EWT) has popped by 32% since the announcement last week, and is now up a gob smacking 74% from the March lows. Having endured daily shelling from the mainland (at exactly 12:00 noon every day) while on the small Republic of China island of Quemoy, this is more than just a symbolic gesture for me. I guess if you can’t beat them, buy them.