Short Taiwan?

[fareastwarriors]

7 minutes ago, zippy1 said:

 The banking system indeed is not the competitive part of the economy.  
Many banks still use paper-copy passbooks. 
Don't ask me why they do that.       

 
Japan likes their paper too. It's almost kind of rustic, charming?

 

 

Edited March 1, 2022 by fareastwarriors

[zippy1]

5 minutes ago, fareastwarriors said:

 
Japan likes their paper too. It's almost kind of rustic, charming?

 

 

I saw that in Japanese drama once and I thought maybe Taiwanese banks got this from the Japanese colony days.  Several state owned commercial banks, which are not big by any international standard, were set up in those days.
Cheers! 

[fareastwarriors]

6 minutes ago, zippy1 said:

I saw that in Japanese drama once and I thought maybe Taiwanese banks got this from the Japanese colony days.  Several state owned commercial banks, which are not big by any international standard, were set up in those days.
Cheers! 

 

My parents were using paper passbooks/booklets from East West Bank in Chinatown maybe 5 years or so ago. They were not happy when that went away. 

[zippy1]

18 minutes ago, fareastwarriors said:

 

My parents were using paper passbooks/booklets from East West Bank in Chinatown maybe 5 years or so ago. They were not happy when that went away. 

My parents, in their 80s now, still use them and would periodically ask me to check/reconcile the passbooks for them.  I consider this our family time as they would chat with me about what they did with the money, whether they got a good deal etc.....  

[nsx5200]

9 hours ago, Peregrine said:

...

 

I visited Taipei a few years ago and was astounded by how antiquated their society was - their banking system was still pen and paper, the population is old and in the words of the locals, the economy had been in stasis for 20 years. The contrast is night and day compared with China's Tier 1 cities. Taiwan's young also sees this and are making conscious choices to move to China in search of better jobs. 

 

Taiwan is actually more Chinese than China, not having gone through the cultural revolution.  So you actually experience more of the thousand years of legacy there.  Some of the traditional spots may look older, but if you look closely, there is actually a lot more high-tech compared to a typical U.S. city.  High speed rail connect the whole (small) country.  Smart pass/card that's actually unibiqutious and usable.  Government services can actually be accessed via non-descript terminals in 7-11's.  Universal healthcare that covers both western and traditional medicine.  Open digital government platforms (https://en.wikipedia.org/wiki/G0v) that hackers can contribute to.  Merit based society, starting from high school admission.  Having a smaller area means program experiements are cheaper to run, and so the government have a willingness to try new things.  For example, the smart pass/card has already evolved several generations already.  It was this attitude that got the government investing in the semiconductor industry back in the 80's.

 

Taiwan uses a lot of tech where it really matters.  IMHO, it's one of the most high tech Democratic country you'll find.

Edited March 1, 2022 by nsx5200

[hellowod]

4 hours ago, nsx5200 said:

 

Taiwan is actually more Chinese than China, not having gone through the cultural revolution.  So you actually experience more of the thousand years of legacy there.  Some of the traditional spots may look older, but if you look closely, there is actually a lot more high-tech compared to a typical U.S. city.  High speed rail connect the whole (small) country.  Smart pass/card that's actually unibiqutious and usable.  Government services can actually be accessed via non-descript terminals in 7-11's.  Universal healthcare that covers both western and traditional medicine.  Open digital government platforms (https://en.wikipedia.org/wiki/G0v) that hackers can contribute to.  Merit based society, starting from high school admission.  Having a smaller area means program experiements are cheaper to run, and so the government have a willingness to try new things.  For example, the smart pass/card has already evolved several generations already.  It was this attitude that got the government investing in the semiconductor industry back in the 80's.

 

Taiwan uses a lot of tech where it really matters.  IMHO, it's one of the most high tech Democratic country you'll find.

 

I agree with this. If you go to Taipei and compare it with the newer cities in China like Shen Zhen, Taipei on the outside is obviously much more antiquated ("ugly/old") than the new skyscrapers in Shen Zhen, which uses modern infrastructure and benefit from newer tech like all electric cabs. However, this is on the outside/hardware - Shen Zhen is all shiny. However, when it comes to services, I found Taiwan very good/better than Shen Zhen, e.g., medical services are better than in Shen Zhen, i.e., software is better. I also felt Taipei have a slower pace of life in Shenzhen, which I liked, but maybe younger people wants a faster way of life in the big mainland cities. That being said, I felt even Guang Zhou had antiquated areas too.

[zippy1]

For the past 5 years  (03/05/2017-03/01/2022),
The Taiwanese stock index (^twii) is up 85.51%
The Shen Zhen composite index (399001.sz) is up 29.42%
The Shanghai composite index (000001.ss) is up 7.58%
The Heng Seng index (^HSI) is down 3.57%
Taiwanese stock market appears to benefit from the geopolitical change in the recent years. 

[Spekulatius]

My experience in China is data (mostly Suzhou, some Shanghai) but I think China is very glizzy from far away and get's shabbier as your look closer. A lot of the new buildings were very crappy build when you look closely.

 

I was walking around one day in Suzhou because I could not haul a taxi back to the hotel and found a whole underworld of what I think were migrants living in cardboard boxes and shanties next to a bridge. I felt like I have made a wrong turn in Oakland.

Edited March 1, 2022 by Spekulatius

[mcliu]

3 hours ago, zippy1 said:

For the past 5 years  (03/05/2017-03/01/2022),
The Taiwanese stock index (^twii) is up 85.51%
The Shen Zhen composite index (399001.sz) is up 29.42%
The Shanghai composite index (000001.ss) is up 7.58%
The Heng Seng index (^HSI) is down 3.57%
Taiwanese stock market appears to benefit from the geopolitical change in the recent years. 

Is it geopolitical change or mainly because of the pandemic driven computing boom and semi shortage?

The 2 largest weights are Foxconn and TSMC. Price performance from 2011-March 2020 is ~30%.

[fareastwarriors]

17 minutes ago, Spekulatius said:

 

 

I was walking around one day in Suzhou because I could not haul a taxi back to the hotel and found a whole underworld of what I think were migrants living in cardboard boxes and shanties next to a bridge. I felt like I have made a wrong turn in Oakland.

 

 

There are 100s and 100s of millions of extremely poor Chinese just scrapping by but the world never sees that or bother to talk about that. People just see the glitz and glamor of the big shiny cities in Tier1 cities and how Chinese tourists empty out LV stores  .

 

Many parts of Oakland and SF are worse than any 3rd world cities. 

 

 

Long video but just a few seconds is enough to get the picture.  

 

 

Edited March 1, 2022 by fareastwarriors

[Peregrine]

14 minutes ago, Spekulatius said:

My experience in China is data (mostly Suzhou, some Shanghai) but I think China is very glizzy from far away and get's shabbier as your look closer. A lot of the new buildings were very crappy build when you look closely.

 

I was walking around one day in Suzhou because I could not haul a taxi back to the hotel and found a whole underworld of what I think were migrants living in cardboard boxes and shanties next to a bridge. I felt like I have made a wrong turn in Oakland.

 

China has massive income inequality. With 1.4 billion people, most people are still very poor. But the relevance to young Taiwanese isn't how the average Chinese person is doing - it's how well those living in coastal cities are doing because that's where they're most likely to relocate to find work.

 

This article provides some context: https://supchina.com/2019/02/26/young-taiwanese-are-dreaming-of-careers-in-china-but-not-unification/

 

"81 percent do not support Xi’s “one country, two systems” model"

 

Yet,

 

"According to a 2018 survey by Taiwan’s 1111 online job bank, 76 percent of Taiwanese said they would be interested in working in China, citing linguistic and cultural similarities and a stronger economy."

 

 

[nsx5200]

1 hour ago, Peregrine said:

 

China has massive income inequality. With 1.4 billion people, most people are still very poor. But the relevance to young Taiwanese isn't how the average Chinese person is doing - it's how well those living in coastal cities are doing because that's where they're most likely to relocate to find work.

 

This article provides some context: https://supchina.com/2019/02/26/young-taiwanese-are-dreaming-of-careers-in-china-but-not-unification/

 

"81 percent do not support Xi’s “one country, two systems” model"

 

Yet,

 

"According to a 2018 survey by Taiwan’s 1111 online job bank, 76 percent of Taiwanese said they would be interested in working in China, citing linguistic and cultural similarities and a stronger economy."

 

 

 

A minor, but significant detail: that article was written in 2019, pre Hong-Kong take-over.

[zippy1]

5 hours ago, mcliu said:

Is it geopolitical change or mainly because of the pandemic driven computing boom and semi shortage?

The 2 largest weights are Foxconn and TSMC. Price performance from 2011-March 2020 is ~30%.

To answer your question, you probably ought to find out, beyond the pandemic ( hopefully an one time event), what drove the semi shortage. For people working on semi, the answer is quite clear.

 

before 2017, when the US China trade  war started, Taiwanese market did not appreciate much.

 

Edited March 1, 2022 by zippy1

[mcliu]

7 hours ago, zippy1 said:

To answer your question, you probably ought to find out, beyond the pandemic ( hopefully an one time event), what drove the semi shortage. For people working on semi, the answer is quite clear.

 

before 2017, when the US China trade  war started, Taiwanese market did not appreciate much.

 

Thanks. Are you saying the shortage is from US shifting trade to Taiwan from China?

Btw, what do you think of China's plans to become self-reliant on semi? Any chance of success or is it just too difficult since you need global scale/equipment?

[zippy1]

57 minutes ago, mcliu said:

Thanks. Are you saying the shortage is from US shifting trade to Taiwan from China?

Btw, what do you think of China's plans to become self-reliant on semi? Any chance of success or is it just too difficult since you need global scale/equipment?

Shortage is partly because everyone wants to have more inventory to be safe in case there is a supply chain disruption.  I am not on the business side to know how this will play out. But anecdotally I have heard that people even try to "hoard" equipment instead of finished chips.  When people "hoard" equipment, those equipment is not being used to make chips.... 

The other question is really too hard.  That really is not a purely technical question. Even if you look at the supply chain today, you don't know what will happen tomorrow.  I think if any single country can do it, it will be China, though.      

[Peregrine]

10 hours ago, nsx5200 said:

 

A minor, but significant detail: that article was written in 2019, pre Hong-Kong take-over.

 

The 2019 protests began because of an extradition bill which would allow China to detain and extradite alleged criminals from Hong Kong. The bill was subsequently withdrawn in October of that year after weeks of escalating protests.

 

There was certainly no "take-over" in 2019 (the official hand-over happened in 1997) and Hong Kong is still under the "one country, two systems" legal distinction.  I really don't know where some of you get your news from.

Edited March 2, 2022 by Peregrine

[nsx5200]

2 hours ago, Peregrine said:

 

The 2019 protests began because of an extradition bill which would allow China to detain and extradite alleged criminals from Hong Kong. The bill was subsequently withdrawn in October of that year after weeks of escalating protests.

 

There was certainly no "take-over" in 2019 (the official hand-over happened in 1997) and Hong Kong is still under the "one country, two systems" legal distinction.  I really don't know where some of you get your news from.

If you actually follow what is actually practiced, Hong Kong citizen have essentially lost their Democratic rights since.  The Hong Kong citizens no longer can elect officials that have real power(lost of the second system, for all intent and purposes).  Yes, on paper, it’s still two systems, in reality, it’s not.  Similar to the Texas abortion non-ban.  On paper, it’s not a ban, in practice, it’s more or less a ban.  To argue otherwise is to deny reality.  Here’s a sample of that type of analysis.

 

https://www.cfr.org/backgrounder/hong-kong-freedoms-democracy-protests-china-crackdown

 

If you have other credible sources that shows otherwise, you’re welcome to share.  I concede that there’s a high probability that I may have missed another angle to it and welcome challenges to that.

[Peregrine]

9 hours ago, nsx5200 said:

If you actually follow what is actually practiced, Hong Kong citizen have essentially lost their Democratic rights since.  The Hong Kong citizens no longer can elect officials that have real power(lost of the second system, for all intent and purposes).  Yes, on paper, it’s still two systems, in reality, it’s not.  Similar to the Texas abortion non-ban.  On paper, it’s not a ban, in practice, it’s more or less a ban.  To argue otherwise is to deny reality.  Here’s a sample of that type of analysis.

 

https://www.cfr.org/backgrounder/hong-kong-freedoms-democracy-protests-china-crackdown

 

If you have other credible sources that shows otherwise, you’re welcome to share.  I concede that there’s a high probability that I may have missed another angle to it and welcome challenges to that.

 

If you think that China would have ever allowed Hong Kong to elect a chief executive who was not aligned with Beijing, then you are gravely mistaken. All 4 chief executives since the hand-over were pro-Beijing and vetted by the CCP.

[zippy1]

2 hours ago, Peregrine said:

 

If you think that China would have ever allowed Hong Kong to elect a chief executive who was not aligned with Beijing, then you are gravely mistaken. All 4 chief executives since the hand-over were pro-Beijing and vetted by the CCP.

That what exactly Taiwanese are against. We are a real democracy. We are just different than you, ok?

I know next you will say what Taiwanese want do not matter.  
Typical thuggish argument….
anyway, if you think shorting Taiwan is a good investment idea. Go ahead. 
If you had started shorting Taiwan following your 2018 visit, it would be less profitable than shorting Shanghai Shenzhen and Heng Seng. So go ahead…

[Peregrine]

9 minutes ago, zippy1 said:

That what exactly Taiwanese are against. We are a real democracy. We are just different than you, ok?

I know next you will say what Taiwanese want do not matter.  
Typical thuggish argument….
anyway, if you think shorting Taiwan is a good investment idea. Go ahead. 
If you had started shorting Taiwan following your 2018 visit, it would be less profitable than shorting Shanghai Shenzhen and Heng Seng. So go ahead…

 

Lol what? I never once said that what Taiwanese want don't matter or that shorting Taiwanese stocks is a good idea.  I'm all for democratic norms and have hope that the entire world will trend in that direction over time. This has nothing to do what what you or I or anyone else wants. This has to do with what's likely to happen. Learn to read.

 

 

Edited March 2, 2022 by Peregrine

[Spekulatius]

9 minutes ago, zippy1 said:

That what exactly Taiwanese are against. We are a real democracy. We are just different than you, ok?

I know next you will say what Taiwanese want do not matter.  
Typical thuggish argument….
anyway, if you think shorting Taiwan is a good investment idea. Go ahead. 
If you had started shorting Taiwan following your 2018 visit, it would be less profitable than shorting Shanghai Shenzhen and Heng Seng. So go ahead…

After what occurred in Russia, I would be much more inclined to short China. Having a dictator leading a country is not a great setup for the equity market. This is not rocket science - there are studies on this.

 

Why jump over 10 foot hurdles when you don't have to.

[nsx5200]

@Spekulatius, why you said reminds me of this great article provided by turtle bay from Jared.Diamond regarding optimal government fragment and control structure.

https://web.archive.org/web/20160908035153/https://www.edge.org/conversation/jared_diamond-how-to-get-rich

 

Probably a bit too macro to be acted upon, investment-wise, but something to ponder when looking at dictatorish government vs fragmented (US, Euro).  After reading that article, I can see some of the view points of the politics on the right in regards to supporting some of the more unpopular tech like guns.

 

Thanks for all the interesting ideas to keep the mind going.  Leads to less trading, which is a good thing.

[Spekulatius]

11 minutes ago, nsx5200 said:

@Spekulatius, why you said reminds me of this great article provided by turtle bay from Jared.Diamond regarding optimal government fragment and control structure.

https://web.archive.org/web/20160908035153/https://www.edge.org/conversation/jared_diamond-how-to-get-rich

 

Probably a bit too macro to be acted upon, investment-wise, but something to ponder when looking at dictatorish government vs fragmented (US, Euro).  After reading that article, I can see some of the view points of the politics on the right in regards to supporting some of the more unpopular tech like guns.

 

Thanks for all the interesting ideas to keep the mind going.  Leads to less trading, which is a good thing.

@Packer16 / Bonhoeffer on Twitter provided a link to the paper on equity returns vs country and government type. I took from this that on aggregate you are not paid for the additional risk you are taking. I may remember it all wrong though and I don’t have a link either.

 

This is not to say that sometimes these investments work out well. I do think it makes sense though because these totalitarian countries often seem very stable so it is understandable if people underestimate the risk. I really all it takes from seemingly stable to total chaos though is the dictator waking up one more ring with a certain itch to do something crazy and things go off the rails.

 

This also applies to merging market. I think it was @PlanMaestro who said that it takes just one bad election for an emerging market country to go to chaos.

Edited March 3, 2022 by Spekulatius

[patience_and_focus]

23 hours ago, Spekulatius said:

After what occurred in Russia, I would be much more inclined to short China. Having a dictator leading a country is not a great setup for the equity market. This is not rocket science - there are studies on this.

 

Why jump over 10 foot hurdles when you don't have to.

 

I would absolutely not short China. Very superficially the risks look similar - both big countries, with dictator, appetite for territorial conquest / grab, nostalgia as a historic power and belief of recent wrongs, etc etc. But Russia is weak - it only has warheads. China is very different.

 

Lets go through a simple thought experiment: China tries to grab Taiwan (maybe by full force, may be by encirclement, etc). How will western nations respond?

 

(a) Likelihood of western nations going in after China with their warships, soldiers, planes etc is close to zero

 

(b) West goes for economic nuclear war (like what it is doing to Russia). China responds in kind by cutting off precious metals for semis, stopping supply chain in and around entire south east asia, take their increasing influence and ownership of resources in Africa/South America to choke off resource supplies to the west, launches cyberwarfare  to cripple western modern economy working on internet, etc etc. This is mutually assured economic destruction.

 

(c) China is the biggest trading partner for not just a majority of western nations, but to most nations in the world. It produces almost everything that the world needs. It pays to do that. Most countries will not come to join the western alliance (even some western countries may balk). The supply limitations to even UK troops for simple things like toilet paper, etc vs US troops during world war II is well documented. US was and became preeminent manufacturing hub just before and during the WWII. Now China calls the shots. Not that US cannot do manufacturing anymore but its not a turn key solution and any conflict will be very painful in short to medium term. By the time things adjust, the (economic) war may be over. 

 

To me this most likely looks like beginning of (Economic) Cold War with China where neither side is able to push the red nuclear button for a foreseeable future.

[Spekulatius]

15 minutes ago, patience_and_focus said:

 

I would absolutely not short China. Very superficially the risks look similar - both big countries, with dictator, appetite for territorial conquest / grab, nostalgia as a historic power and belief of recent wrongs, etc etc. But Russia is weak - it only has warheads. China is very different.

 

Lets go through a simple thought experiment: China tries to grab Taiwan (maybe by full force, may be by encirclement, etc). How will western nations respond?

 

(a) Likelihood of western nations going in after China with their warships, soldiers, planes etc is close to zero

 

(b) West goes for economic nuclear war (like what it is doing to Russia). China responds in kind by cutting off precious metals for semis, stopping supply chain in and around entire south east asia, take their increasing influence and ownership of resources in Africa/South America to choke off resource supplies to the west, launches cyberwarfare  to cripple western modern economy working on internet, etc etc. This is mutually assured economic destruction.

 

(c) China is the biggest trading partner for not just a majority of western nations, but to most nations in the world. It produces almost everything that the world needs. It pays to do that. Most countries will not come to join the western alliance (even some western countries may balk). The supply limitations to even UK troops for simple things like toilet paper, etc vs US troops during world war II is well documented. US was and became preeminent manufacturing hub just before and during the WWII. Now China calls the shots. Not that US cannot do manufacturing anymore but its not a turn key solution and any conflict will be very painful in short to medium term. By the time things adjust, the (economic) war may be over. 

 

To me this most likely looks like beginning of (Economic) Cold War with China where neither side is able to push the red nuclear button for a foreseeable future.

I think you are very wrong with your assessment, but leave it at that. It is impossible to know right now and hopefully we will never find out.

 

I do think the US equities will beat Chinese equities going forward in the long run (>5 years).