- Taiwan’s stock market rises after NVIDIA CEO Jensen Huang visits the island amid rising tensions with China.
- Huang’s arrival comes as a show of confidence despite China’s recent military drills around Taiwan.
- Investors are turning their attention to technology stock indexes rather than geopolitical risks, finding buying opportunities.
Nvidia co-founder and CEO Jen-Hsun Huang is visiting Taiwan this week, receiving a warm welcome and boosting the company’s stock market.
Huang arrived in Taiwan on Sunday, a day after China concluded military drills around the island, which it claims as its territory. People’s Liberation Army of China, He said the exercise was a “severe punishment for the separatist acts of ‘Taiwan independence’ forces.”
The drills began on Thursday while Taiwan’s stock market was little changed. The market rose again on Monday after Huang’s arrival, a sign of confidence in Taiwan’s giant semiconductor industry on which the world relies.
Local media have been on his tail this week, with the leather-jacketed, rock-star-like tech executive spotted dining with bigwigs from TSMC, Foxconn and Asus.
On Wednesday, Huang strolled through the night market with Morris Chan, 92, the founder of semiconductor giant TSMC.
He also made time to visit his favorite hair salon in Taipei, according to the salon’s Instagram.
Huang is due to deliver the opening speech at tech trade show Computex on Sunday.
Other prominent global technology executives are scheduled to deliver keynote addresses, including AMD CEO Lisa Su, who is a distant relative of Huang’s, Intel CEO Pat Gelsinger, Qualcomm CEO Cristiano Amon and Arm CEO Rene Haas.
“PHLX Semiconductor Index is more important than PLA”
The stock market rally, buoyed by Taiwan’s tech stocks, contrasts with growing concerns about Chinese military activity around the island.
Investors should keep in mind that rising tensions between China, Taiwan and the United States will be a “permanent feature of the global landscape,” Rory Green, chief China economist at GlobalData TS Lombard, said in a report on Thursday.
But for investors, “the Philadelphia Stock Exchange Semiconductor Index is more important than the PLA,” Green said. The index is the Philadelphia Stock Exchange Semiconductor Index, which is up 24% this year and nearly 50% over the past 12 months.
In Taiwan, the Taiwan Stock Exchange (TAIEX) has hit a record high this year as the artificial intelligence boom on Wall Street has boosted shares of U.S.-listed Nvidia, whose largest supplier is TSMC.
Taiwan’s index has risen about 20 percent so far this year and hit a new all-time high on Tuesday.
“In this case, the AI equity theme, physical investment in AI and a broad recovery in electronic component demand are driving Taiwan’s strong growth and strong stock market performance,” Green wrote.
He added that a full-scale Chinese invasion of Taiwan was “highly unlikely” because of the high military and economic risks, and that any military buildup for an invasion would likely be made public at least 12 months in advance, similar to the Russian buildup near Ukraine before its invasion.
Green said a complete blockade of Taiwan would be a risk, but that China, as an East Asian power, is completely unprepared for international isolation and would not be willing to risk the severe economic, financial and military consequences that a blockade would entail.
Green said investors should view the geopolitical sell-off as an opportunity to buy at cheaper prices.
“If the macro environment remains favorable and China is far from achieving ‘fortress-like’ economic conditions, the upcoming sell-off could present an attractive buying opportunity,” Green wrote.
