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  • Writer's pictureGeopolitics.Λsia

Taiwan's Election Results: A Timely Geopolitical Respite?

The dust has settled on Taiwan's riveting general election, with Vice-President Lai Ching-te emerging as the Republic of China's de facto president-elect. However, Lai's victory, secured with just 40.05% of the vote, leaves much to be desired. This result is significant for two reasons: it marks the first time since 2000 that a winning candidate has garnered less than a majority, and it represents the first instance since the inception of direct presidential elections in 1996 that a party has clinched more than two consecutive terms.

The legislative results mirror this trend, with the Democratic Progressive Party (DPP) securing a mere 51 seats – a reduction of 10 from the previous election. Conversely, the Kuomintang (KMT) has gained ground, boosting its representation by 10 seats to a total of 52. These outcomes necessitate a strategic alliance between the DPP and the Taiwan People's Party (TPP).

From a geopolitical perspective, the TPP's moderate stance introduces a nuanced recalibration of Taiwan's position on independence. Rather than veering towards extremes of pro-independence or pro-Beijing sentiment, the election results usher in a period of delicate balance. This development promises to provide a much-needed "breathing space" for Asian geopolitical and economic landscapes, potentially influencing the region's dynamics for the next decade.

Shifting Dynamics

In the recent political drama of the 2024 Taiwanese elections, the Taiwanese People's Party (TPP) emerged as an unexpected but pivotal player, asserting a role that could recalibrate Taiwan's political compass. The TPP, under the pragmatic leadership of Ko Wen-je, carved out a space in the electorate's psyche, appealing particularly to the younger, more reform-minded voters. This shift hints at a growing weariness with the entrenched narratives peddled by the dominant Democratic Progressive Party (DPP) and the Kuomintang (KMT).

Our newly multi-headed AI Blue has predicted a more geopolitical de-escalation in Asia in medium-term over the next decade.

Ko's centrist and practical political philosophy resonated with those seeking a middle path in the increasingly polarized debate between the DPP's staunch pro-independence stance and the KMT's leanings towards Beijing. The TPP's ascent is a barometer of public sentiment, signalling a desire for more pragmatic approaches to governance, especially in matters concerning cross-strait relations and domestic challenges.

The TPP's role in the hung parliament is not just a footnote but a potential game-changer. As a kingmaker or influential minority, the TPP could temper the extremes of both the DPP and the KMT, injecting a dose of moderation into legislative processes and policy decisions. This newfound influence might bring about a more balanced approach to governance and foreign relations, offering nuanced solutions to Taiwan's complex political landscape.

Moreover, the TPP's success reflects a broader global trend where voters, disillusioned with traditional political choices, often gravitate towards alternative options. This trend is not isolated to Taiwan but echoes in various corners of the world, where the electorate is increasingly skeptical of mainstream political narratives and more receptive to unconventional voices. The TPP's rise could thus be seen as part of a larger wave of political reconfiguration, where new voices and perspectives are reshaping the global political landscape.

The Vibrant Economic Structure

In the landscape of Taiwan's economy, the semiconductor sector is often the most lauded, yet it's just one facet of a multifaceted and globally competitive industrial environment. The electronics and IT sector extends well beyond semiconductors, encompassing a wide range of products including personal computers, laptops, servers, and mobile devices. Taiwanese companies such as Acer, ASUS, and HTC have established themselves as significant global entities in this field. Parallel to this is the optoelectronics industry, which includes the manufacturing of LCD panels, LEDs, and related components. This industry not only complements the semiconductor sector but is also integral to the functionality of modern electronic devices.

Taiwan's Trading Structure (source)

Taiwan's industrial prowess is further demonstrated in its machinery and equipment manufacturing sector, specializing in precision machinery and equipment. This includes a range of products from machine tools to industrial machinery and automation equipment, addressing both domestic and international market demands. The petrochemical industry, led by giants like Formosa Plastics Group, represents another key sector. It plays a crucial role in providing raw materials for various applications, stretching from consumer goods to industrial products. In the realm of transport manufacturing, Taiwan's shipbuilding industry has developed a competitive edge, particularly in the construction of medium-sized ships, yachts, and advanced specialized vessels. This sector benefits from Taiwan's strategic maritime location and expertise.

Taiwan's commitment to sustainability is evident in its growing renewable energy sector, especially in solar photovoltaic (PV) manufacturing. The government's initiative towards renewable energy has not only bolstered this sector but also positioned Taiwan as a significant player in the global solar energy market. Similarly, the textile industry in Taiwan has gained recognition for its high-quality, innovative fabrics, and functional textiles, catering to diverse applications from fashion to sportswear and industrial uses. The bicycle manufacturing industry, with globally recognized brands like Giant and Merida, adds another dimension to Taiwan's export economy, known for its high-quality and innovative designs.

Major Asian Economies (excluding Japan, China and India), [source: The Maddison Project]

The agriculture and food processing sectors, though smaller in scale, have developed niche markets in high-quality tea, fruits, organic products, and health-oriented convenience foods. Additionally, Taiwan's healthcare and biotechnology sectors are emerging as significant players, with a focus on research and development in areas like biomedicine, genetics, and medical devices. Taiwan's industrial strategy is characterized by a focus on high-value-added manufacturing, technological innovation, and a shift towards more knowledge-intensive industries. This approach, coupled with strong government support in research and development and a focus on education and skill development, has been instrumental in fostering these competitive industries. According to the Customs Port Trade (CPT) Single Window project, Taiwan's trade is heavily dominated by electrical equipment in both imports and exports. The major export destinations underscore an economic orientation favoring Asia, with China and Hong Kong at the forefront, followed by ASEAN, the US, Japan, South Korea, and the EU. This pattern highlights Taiwan's industrial focus led by semiconductors and an economic structure favoring Asian markets over Western economies.

Measuring The Preciseness of Geopolitical Prediction Model

In our role as a Think Tank specializing in Asian Geopolitics, we utilize a range of sophisticated tools and analytical frameworks to dissect the complex and dynamic geopolitical landscape of Asia. Our methodology integrates three key components: 1) Positive governance, which aids in understanding the dynamic and organic structure of nation-states and their higher intra-national governance structures; 2) The "meta-geopolitics" framework, which systematically analyzes the interplay of three forces - hard power, economic power, and the noopolitik of active state and non-state actors; 3) A robust geopolitical analytic model, augmented by Generative AI, which constantly evaluates our predictions against emerging realities. To measure these dynamics, we employ portfolio investment as an instrument to gauge the unfolding geopolitical reality in the region.

Recent developments in China, as reported by The Wall Street Journal, offer a vivid example of our analytical approach in action over counter-intelligence measurement in China. There has been a notable consolidation within China's political apparatus under the Chinese Communist Party (CCP), evidenced by the dismissal of several high-ranking officers. This includes the replacement of General Li Shangfu with former naval commander General Dong Jun as Defence Minister, alongside the termination of membership from the National People's Congress (NPC) of various other high-ranking officials such as Zhang Zhenzhong, Zhang Yulin, Rao Wenmin, Ju Xinchun, Ding Laihang, Lu Hong, Li Yuchao, Li Chuanguang, and Zhou Yaning. These shifts in military leadership, coupled with the recent dismissal of Qin Gang as Chinese Minister of Foreign Affairs, signal significant changes in China's political landscape.

Furthermore, China is grappling with internal economic challenges, including a real estate debt crisis and rising unemployment among youths. These issues fuel speculation regarding an increase in nationalism as a response to growing inequality and a slowing economy. However, the recent developments in Taiwan's internal politics, particularly its elections, might offer a "breathing space" in the Asian geopolitical arena. This respite could be crucial given the clear shift of the economic locomotive towards Asia, amidst ongoing tensions in Europe due to the Ukraine-Russia conflict, which seems unlikely to reach a resolution soon.

The Tech Portfolio [FANGMT: Facebook (Meta), Amazone (AMZN) / Apple (APPL), Nvidia (NVDA), Google (GOOGL), Microsoft (MSFT) and Tesla (TSLA)] offers high growth potential with high beta and tracking error, ideal for investors who embrace higher risk and volatility, reflecting the typical high-reward, high-risk nature of tech stocks. In contrast, the Geo Portfolio presents a more conservative option with lower volatility and closer benchmark alignment, suitable for those seeking steady returns and reduced market fluctuations. Meanwhile, the S&P 500, as a standard benchmark, strikes a balance between growth and stability, embodying the broader market's characteristics.

The Traditional Energy Sector (XLE) shows lagging performance, influenced by the global shift to renewables, regulatory changes, market volatility in oil and gas, and ESG concerns, with geopolitical events and commodity price fluctuations adding to its instability. Conversely, the Renewable Energy Sector (ICLN) displays fluctuation and evolving reliability, driven by technological advancements, policy shifts, and growing investor interest in sustainability. Despite its high growth potential, it faces higher volatility and risk, reflective of the emerging status of many companies in this sector.

Investing in ASEAN blue-chip companies listed on the NYSE or via ADRs combines exposure to these markets with the regulatory standards and liquidity of the U.S. market. Not all ASEAN countries have blue-chips listed in New York, but here's a hypothetical portfolio: DBS Group Holdings Ltd (DBSDY) from Singapore in Banking/Financial Services, PT Telekomunikasi Indonesia (TLK) in Telecommunications, and PLDT Inc. (PHI) from the Philippines in Telecommunications. For Malaysia, Thailand, and Vietnam, where listings are scarce, consider ASEAN-focused ETFs for broader exposure. This portfolio allocates 25% each to DBSDY, TLK, and PHI, with the remaining 25% in ETFs. It offers diversification across countries, though it's telecom-heavy, with ETFs providing sectoral diversity. It's important to be mindful of geographic limitations and market risks like currency fluctuations and geopolitical events.

The experimentation with the five distinct portfolios against the backdrop of the Taiwan election reflects an attempt to understand how geopolitical events can influence investment strategies and market dynamics. The Taiwan election, a significant political event, has the potential to impact regional stability and economic policies, not just in Taiwan but across the broader Asia-Pacific region. This experiment aimed to capture the nuanced shifts in investor sentiment and market performance that might arise from such geopolitical changes. By analyzing a diverse range of portfolios – the S&P 500 as a benchmark, a tech-focused portfolio, a geopolitically driven (Geo) portfolio, and portfolios centered on traditional and renewable energy sectors – we sought to gauge the differential impacts of the election across various market segments. The rationale was to explore how different sectors might respond to the election's outcomes, factoring in variables like changes in trade policies, regional alliances, and economic strategies that could arise in its wake.

The choice of portfolios was deliberate to cover a spectrum of investment themes – from the broad market exposure of the S&P 500 to the more focused tech, traditional energy, and renewable energy sectors, alongside the Geo portfolio, which was specifically designed to respond to geopolitical shifts. This approach allowed us to observe not only the direct impacts of the election on Taiwanese or regional markets but also the indirect effects on global markets, such as technology and energy, which are deeply intertwined with geopolitical developments. The experiment’s design aimed to yield insights into potential investment opportunities and risks that emerge in a rapidly changing geopolitical landscape. By comparing these portfolios against the S&P 500 benchmark, we aimed to assess their relative performance and risk profile, offering a comprehensive view of how varying investment strategies might fare in a post-election context. This analysis serves to inform investors about the possible implications of geopolitical events on different investment sectors, guiding strategic decision-making in a globally interconnected financial environment.


Please note that the discussions and analyses presented in this article are for educational purposes only. They are not intended as investment recommendations. Our focus has been on exploring the impact of geopolitical evolution on portfolio investment and using it as a benchmarking instrument. However, it's crucial to understand that:

  1. Equity Investment Considerations: Equity investments are subject to a wide range of factors beyond geopolitical dynamics. These include financial attractiveness, market stability, company performance, sector trends, and overall market size. Such investments can be highly volatile and may not always align with geopolitical trends.

  2. Short-Term vs. Long-Term Endeavors: Equity investments can vary significantly in terms of investment horizons. While some may be suitable for short-term endeavors, others might be more appropriate for long-term strategies. The appropriateness of any investment should be based on individual financial goals, time horizons, and risk tolerance.

  3. Importance of Diverse Factors: The performance of equity markets and individual portfolios depends on a complex interplay of various factors, including economic indicators, corporate earnings, investor sentiment, and global market conditions.

  4. Observation of Lagged Time: Our analysis acknowledges the possibility of "lagged time" or delays in how quickly portfolios respond to geopolitical changes. Market reactions to geopolitical events can be immediate or delayed, and the full impact may only become evident over an extended period.

  5. Context of Analysis: This analysis is part of an ongoing effort to improve our platform and provide insightful discussions. It should be viewed as a moment-in-time snapshot within a broader, evolving conversation about investments and geopolitical impacts.

  6. Professional Advice Recommended: We strongly recommend consulting with financial professionals before making any investment decisions. An experienced financial advisor can provide personalized advice that takes into account your individual circumstances and investment objectives.


In a pivotal move, SIU and Geopolitics.Asia are advancing to the final stage of overhauling their geopolitical analytic platform. This significant development encompasses several key projects:

  1. AI Blue Contest: In a recent hackathon, the focus was on minimizing hallucination rates in AI models. The use of Retrieval-Augmented Generation (RAG) and multi-headed AI models techniques was central to this endeavor, marking a step forward in AI reliability and accuracy.

  2. Website Revamp: A comprehensive website overhaul is underway, integrating advanced AI to assist in trend monitoring and automated scenario projections. This feature aims to enhance user engagement by offering sophisticated and real-time geopolitical insights.

  3. Research Initiatives: Intensive research is being conducted on the positive governance model and the meta-geopolitical framework. These efforts are geared towards deepening the understanding of complex geopolitical dynamics and improving analytical methodologies.

  4. Geopolitical Generative AI Fine-Tuning: A concerted effort is being made to refine our generative AI for geopolitical analysis, ensuring more precise and context-aware outputs.

In light of these developments and based on user engagement observed on our website, SIU and Geopolitics.Asia have decided to maintain a minimum frequency of monthly geopolitical analysis reports. However, recognizing the fluid nature of geopolitical events and technological disruptions, there is a provision for additional contingency reports on an as-needed basis. This strategy of resource allocation and report scheduling will remain in place until the launch of our fully upgraded website. This strategic shift not only signifies our commitment to staying at the forefront of geopolitical analysis but also reflects our dedication to leveraging cutting-edge technology to provide our users with the most accurate and timely insights. The culmination of these projects is expected to greatly enhance our platform's capabilities, offering an unparalleled analytical experience in the realm of geopolitics.


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