Ma ‘elected’ KMT chairman, Hu congratulates him, markets ‘react’

In a highly anticipated electoral farce with a foregone conclusion, President Ma Ying-jeou (馬英九) on Sunday was “elected” chairman of the Chinese Nationalist Party (KMT) with 92 percent of the about 300,000 votes cast. Voter turnout was low, at about 56 percent, and Ma was the only candidate. Clearly satisfied with the result, Chinese President Hu Jintao (胡錦濤) broke 60 years of diplomatic ice on Monday by sending Ma a 73-word congratulatory telegram, in which he pompously said: “I hope our two parties can continue to promote peaceful cross-Strait development, deepen mutual trust, bring good news to compatriots on both sides and create a revival of the great Chinese race.”

Some political analysts are already suggesting that Hu’s telegram is a sign that he would like to hold a summit with Ma sometime before he retires in 2012, which dovetails with both leader’s ostensible hankering for a Nobel Peace Prize. While Ma has denied having any immediate plans to meet Hu, pressure has been mounting for him to do so, especially now that he is KMT chairman. Of course, a precondition for any meeting between Hu and Ma would be that it be held between party chairmen rather than presidents, as the latter would symbolize that Taiwan is a sovereign country, which Beijing denies.

MARKETS REACT

In an article on the Hu letter today, Reuters could not refrain from adding that Ma’s “election” and Hu’s telegram “helped boost Taiwan stocks [,] which rose 0.79 percent … to end above 7,000 points for the first time in 11 months.” In recent months I have observed a tendency by both wire agencies and financial analysts to equate rises in the Taiwanese stock market with “improved relations with China” and to blame drops on Democratic Progressive Party (DPP) “troublemakers” (demonstrations and so on). As the Reuters piece does not attribute the comment, we can only conclude that the reported reached this conclusion on his own or was paraphrasing a unnamed financial analysts.

What Reuters fails to mention, however, is that today — and here I quote The Associated Press — “Asian markets extended their winning … as hopes company earnings will rebound along with global growth continue to drive investors into stocks.”* What Reuters also does not mention is that (a) the Taiwan stock exchange opened flat this morning and (b) investors have known for quite a while that Ma would win the “election.” While recognizing that so-called financial experts and analysts, when contacted by wire agencies, cannot remain silent and must attribute rises and falls in the stock market to something, linking Ma’s “election” or the Hu telegram to a 0.79 rise in the local bourse when region-wide macroeconomic factors and agreement on “better global economic prospects” far better explain the modest rise is dishonest.

The reflex by financial experts to use cross-strait political developments as a proximate cause of stock performance in Taiwan is so prevalent that I am beginning to wonder if investment houses are not letting their own political agendas interfere with their assessments.** It is increasingly evident that big business and financial investors (at least in certain sectors that stand to benefit) all favor cross-strait rapprochement, if not eventual unification. By invariably portraying rising stock value in Taiwan as a direct result of Ma’s successes (and conversely, by blaming devaluation on DPP shenanigans), those analysts are politicizing their assessments and undermining their credibility as “experts,” while helping the KMT and the Chinese Communist Party take us closer to economic ultradependence and eventual unification.

* Tokyo’s Nikkei 225 stock average rose 144.11 points, or 1.5 percent, to 10,088.66; Hong Kong’s Hang Seng rose 268.83, or 1.4 percent, to 20,251.62; South Korea’s KOSPI gained 1.4 percent; Australia’s stock measure was up by 1.2 percent; the main index in Shanghai climbed 1.9 percent. Agence France-Presse reported that Singapore shares closed 1.71 percent higher Monday, mirroring gains in regional markets amid hopes of an economic rebound globally.

** On Oct. 24 last year, Deutsche Presse-Agentur (DPA) reported that the Taiwanese stock exchange was down nearly 3 percent as the result of a mass rally organized by the “right wing” and “separatist” DPP, failing to mention that on the same day, all Asian stock markets were also markedly down: Japan 7 percent and South Korea 9 percent, among others. Then, on Oct. 30, it wrote that the Taiwanese bourse was up nearly 6 percent on “positive signs in Taiwan-China ties” ahead of “important dialogue from Nov. 3 to Nov. 7 [ARATS Chairman Chen Yunlin’s visit] to discuss expanding ties.” There again, DPA did not mention that on the same day, the Hong Kong stock exchange was up 12.8 percent, Tokyo almost 10 percent and Seoul 4 percent, while Australia, Singapore and the Philippines added 4 percent or more, developments that had far more to do with macroeconomic factors than cross-strait ties.

This article appeared in the Taipei Times on August 1 under the title “Pro-China politics and the tracking of stocks.” Unfortunately, the article erroneously refers to the South Korean stock exchange as the KOSI. It should have read KOSPI.