A "heads up" for stock watchers...

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"Taiwan to rattle markets? Markets in China, Hong Kong and Taiwan may slip on election news"

"HONG KONG, March 19 (Reuters) - China, Taiwan and Hong Kong are likely to see their stock markets falling in the near term in reaction to Taiwan's presidential election, but the long-term outlook depends on political stability, analysts said on Sunday."

"They said the election of the leader of a pro-independence party reviled by Beijing was expected to cause an immediate drop in stock prices, but support from government funds in Taiwan and China, and Hong Kong's strong fundamentals, should see the markets stabilize soon."

"In the short term there will be an impact on the stock market, I think it's safe to say it will drop in more than one country," said David O'Rear, regional economist and senior consultant at the Economist Conferences."

"Taiwan has sufficient funds to prop up its stock markets and stabilize its currency, should the need arise, O'Rear said."

"Taiwan's finance minister said on Saturday the government would continue to use state funds to ensure stability of the stock market. Taiwan's main stock index suffered its worst loss last Monday and the government stepped in to use part of a T$500 billion fund on Thursday and Friday to stabilize the market."

"Over the medium term news from Wall Street is more likely to influence Taiwan stocks than local politics, analysts said. But on Monday, the Taiwan exchange will probably see a big drop."

"Y.K. Chan, head of research and economist at CEF GC Brokerage said Taiwan may see some capital flight as fearful investors fled to other markets like the United States and to a lesser extent, Hong Kong."

"On the other hand, Taiwan may see a honeymoon period," Chan said. "Some optimists may invest in the island, if they (feel) there might be some reform in the economy."

"Chinese stocks were also expected to fall on Monday as skittish investors hedged their bets, but analysts said the Communist Party would come to the rescue if the decline began to threaten financial stability."

"The country's yuan currency was expected to be stable as the central bank has a tight grip on the tiny forex market since the yuan currency does not float freely."

"In Hong Kong, observers said the Taiwan election result could send the Hang Seng Index up to 1,000 points, lower but the downturn would probably be short-lived."

"The market last week had already been depressed as people disposed of holdings and although the market rebounded on Friday, the turnover was not very big," said Ricky Tam, senior research manager at Delta Asia Securities. "I expect the market to rebound after a short term decline."

"Morgan Stanley Capital International said on Sunday it added 15 China-related companies listed in Hong Kong to its China Free Index, which many fund mangers use to allocate assets and measure performance."

"Stock market analysts said this was likely to inject a positive note into the Hong Kong stock market, but some said that China and Taiwan would still drive overall sentiment."

"Analysts did not anticipate major changes immediately in investment patterns in China and Taiwan, but said that any swell in political turmoil over a long term could hit the region's economy."

"If there is political uncertainty, of course that will impact the economy...if political obstacles cannot be removed, there will be economic consequences," said Wang Qi, head of research at J&A Securities."

"The region's political landscape will solidify as election excitement ebbs and long term policies are thrashed out." [SNIP]

-- Deb M. (vmcclell@columbus.rr.com), March 19, 2000

Answers

They all seem scared to me.

-- ET (bneville@zebra.net), March 19, 2000.