beyondbrics

Elections in Taiwan’s relatively young democracy are boisterous affairs and this past weekend’s vote for the mayors of the island’s five major metropolitan areas was no exception, with mass rallies and campaign trucks criss-crossing the land.

In the end, the ruling Kuomintang (KMT) party secured three of the five seats up for grabs, confirmation that voters support president Ma Ying-jeou’s economic and cross-Strait policies, despite Ma’s relatively poor personal approval ratings. But whereas past elections convulsed the stock market, on Monday shares in Taiwan barely budged: the main Taiex index closed up 0.66 per cent to 8367 points.

In Taiwan’s typically topsy-turvy style, the election was also seen as a victory of sorts for the opposition Democratic Progressive Party, which overall received more votes than the KMT due to its crushing victories in two southern cities, and unexpectedly close losses in the other three. Some of the losing DPP candidates are even being depicted as potential contenders for the 2012 presidential elections

Still, the KMT victory means there will likely be no major policy changes from Ma’s government.

As Frank Wang, analyst from Morgan Stanley pointed out, “the election outcome is the best possible for the Taiex”. With the election out of the way, “Taiwan’s stock market will shift focus away from politics to fundamental until preparation for the presidential election starts in [middle of next year],” he said.

With fundamentals for Taiwan’s export-oriented economy still looking strong, a half year hiatus until politics intervenes again should be a treat for investors.