I told my children that one big difference from 1988-1990 bubble and today was back then it was mostly in financial stocks. Cathay Insurance (before it became holding company), Huanan Bank (same), Chang Hua Bank (same), etc. Technology stocks were nearly non-existent. Market turnover was like 70% or more in financials. Today that number is for technology stocks. They sell actual products with demand. Not saying we’re not near a bubble, but it’s apples and oranges.
I read this book decades ago. Interesting for those who like Taiwan (financial) history around that time:
Yes, of course. My take was more related to people with no money taking on leverage. Which can go sideways regardless of the quality of the underlying stock.
Extremely risky play, can be seen extensively in Korea and Taiwan. If a correction on 15% happens and they go below the thresholds then banks will require return of the money so forced selling of shares… Then they run to the local lenders with 50% interest rates who breaks their legs if can not return on time… Scary things…
Taiwan is the best positioned country to benefit from the AI investment boom worldwide, so it stands to reason the tech heavy TWSE benefits from that. ASE alone are building or about to get started on 8 new factories right now in Taiwan and Malaysia , this build out involves far more companies than TSMC. A 100% gain in one year is big but not really unreasonable . These companies aren’t trading on massive forward PE. It’s a bit high but not super high e.g 35 forward PE for ASE.
The risk is when hyper scalers dial back on investment (or Anthropic /Open AI in particular). There will obviously be a big correction at some point but Taiwan’s economy and the semicon and data center economy has fundamentally grown which benefits Taiwan long term.
As I posted above the value of Taiwan’s exports have tripled in 6 years. They have been going up consistently since COVID.
At the same time the Taiex has tripled in value, the valuation growth seems well matched over time.
Ok some look a bit stretched already in forward PE of Delta electronics is 45, Mediatek is 60
Most of the gains are baked in already I guess, wouldn’t be shovelling money at this thing anymore.
Take away is that Taiwan stock market will undergo a significant correction at some point within 1 year or so, but the economy will be fine and multiples the size of 10 years ago as AI has fundemantally grown the addressable market so much.
Even though the economy will be fine those with leverage will get smashed.
Yes it will impact the economy for sure, but not sure how big a percentage, wouldn’t bet on those ‘cheap’ apartments anytime soon, govt has a new scheme launching soon giving cheap loans up to 15 million NTD!
I think that likely would be just your wife, they likely won’t offer you anything without her even if you own half of Taitung. I was turned down for a personal loan by a dozen banks before , only one offered but they needed her as guarantor. That guy was eager to make his sales.
