Why did Stocks Drop:How Pelosi's Taiwan Visit Can Affect Our Portfolio & the Global Market 🇺🇸✈️🇹🇼📉📈 (Part 1) $Taiwan Semiconductor Manufacturing(TSM)$$iShares MSCI China ETF(MCHI)$
📰News Summary Across Press🗞 :
(1) House Speaker Nancy Pelosi landed in Taipei on 2/8 (Tue) night.
(2) A visit to Taiwan by the 3rd most important representative of the US government would be a clear sign of diplomatic efforts to strengthen ties between US🇺🇸 & Taiwan🇹🇼, a sovereign island country to which China🇨🇳 claims full sovereignty. Tension between 🇺🇸 & 🇨🇳 around Taiwan’s sovereignty has been escalating during the past few years, & Pelosi’s visit is not welcomed. Prior to her arrival, Beijing warned of the "egregious political impact" of her visit to Taiwan (also see photo on comments from China's Assistant Minister of Foreign Affairs, Hua Chunying).
(3) The Washington Post published a scathing op-ed by Pelosi just as she landed stating:
➡️ "We take this trip at a time when the world faces a choice between autocracy and democracy,"
➡️ "We cannot stand by as the CCP proceeds to threaten Taiwan — and democracy itself."
➡️ "Our congressional delegation's visit should be seen as an unequivocal statement that America stands with Taiwan, our democratic partner, as it defends itself and its freedom."
(4) On 2/8, China reportedly levied new import bans on more than 100 Taiwanese products, imposing a quick economic cost on Taipei for its role in Pelosi's high-profile visit. The Chinese military also held live-fire exercises all day on 30/7 (Sat), just 80 miles from Taiwan.
(5) Managing partner (Stephen Innes) at SPI Asset Management, said, "No party wants a real war, but the risk of mishap or even aggressive war game escalation is real, which could always lead to a tactical mistake,"
🤔💭 How Pelosi's Taiwan Visit 🇺🇸✈️🇹🇼 Can Affect Our Portfolio & the Global Market 📉📈?
(1) According to Reuters, hours after Pelosi landed, concerns about an international flare-up led 4 major stock indexes to drop at least 2%.
➡️ Blue-chip CSI300 index fell 2%
➡️ Hang Seng index fell 2.4%
➡️ Shanghai Composite Index lost 2.3%
➡️ China Enterprises Index lost 2.5%
➡️ Chinese defense stocks rose while Taiwanese shipping & tourism fell.
➡️ Tech giants, property developers, healthcare, resources & new energy all fell.
(2) On the US front, stocks were under pressure with the DJIA down 1.23%, S&P 500 lost 0.67% & Nasdaq 0.16%. Investor sentiment also took a hit after a rising number of Fed officials dismissed recent optimism about an upcoming reversal in monetary policy, warning about the need to keep raising rates aggressively to battle inflation.
(3) Taiwan’s unique expertise in the manufacturing of technological products-most notably semiconductors-makes it a strategic ally in any plan surrounding the production & commercialization of consumer electronics, cars & a wide range of products. Taiwan Semiconductor Manufacturing, $Taiwan Semiconductor Manufacturing(TSM)$ the world’s leading manufacturer of advanced chips fell minimally, closing 0.3% lower on 2/8.
(4) Blackrock’s iShares MSCI China ETF, $iShares MSCI China ETF(MCHI)$an exchange-traded fund providing exposure to large & mid-sized companies in China was down 0.57%
Chief strategist (Marko Papic) from Clocktower Group, explained why stocks dropped during Pelosi's visit:
⚠️The odds of an accident arising from the increased military presence near Taiwan are rising causing stocks to drop & suggested that in the near-term, investors may consider hedging such risk with a tactical short position in Chinese equities & currency.
‼️ The Bottom Line: Companies & sectors that depend on peaceful relations between the US government & the Chinese Communist Party could take a hit.
🤔💭: I’m still bullish 🐂 about TSM at this point in time but bearish 🐻 about MCHI & other Chinese stocks.
(1) Do you think 🇨🇳 & 🇹🇼 will escalate into a war just like 🇷🇺 & 🇺🇦❓
(2) Which stocks are you bullish & bearish for❓
Do share your thoughts with me in the comments section & please help to like my post, many thanks 🤗
As usual-🤔💭 Consider POV & Actions of investors + 👩🏻💻👨🏻💻 Research + 🗑FOMO & Greed = Investing Wisely 🤓🤗 + Accumulating Wealth 💵💰
Source websites: Benzinga, global times, CNBC, newsweek, reuters, forbes, CNN business, bloomberg, wall street journal, fortune, & reuters.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
1) china will not unless force to do so.
2) TSM will bearish, china chipmaker will bullish.
How about NVIDIA?