(Bloomberg) — Investor sentiment toward Taiwan has rarely been this good, with only days to go before its first presidential election in four years.
Its financial markets keep hitting new milestones: the Taiwan dollar last week strengthened past 30 per greenback for the first time since June 2018, government-bond yields remain near all-time lows and stocks are inching toward a record after their best year in a decade.
While many anticipated Taiwan might get caught in the middle of the U.S.-China trade war, its economy and markets were aided in 2019 by local firms being incentivized to invest at home and there being about $12 billion of net inflows to foreign investors’ portfolios through November, according to government data. Fresh proposals to attract investment were announced last week.
“Inflow from both foreign and domestic investors are going to help boost the stock, FX and bond markets in Taiwan,” said Angela Hsieh, a Singapore-based economist at Barclays Plc. Reasons she cited include investors continuing to take advantage of new tax breaks; as much as 30% of the money repatriated can go into Taiwan’s financial markets.
Then there’s the economy. The government forecasts growth will top 2.5% again this year, stronger than regional peers. Foreign inflows boost Taiwan’s currency from demand to convert overseas cash into local dollars. The Taiwan unit has strengthened versus the U.S. dollar for seven straight weeks, the longest streak since May 2015.
Cash remains plentiful, meanwhile, domestically Taiwan’s markets — particularly from life insurers.