Monday, July 27, 2009

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.

6 comments:

vin said...

I appreciate this information and analysis. What I don't get is how news agencies can be so cursory and shoddy in their reporting. Do they and their reporters not care that they get ably sliced and diced in blog posts such as this one? How, in the information age, can they afford to consistently miss the picture? Does it not seriously damage their reputation? Reuters was once a name that commanded respect; does anyone still see it as an august organization?

Anonymous said...

Chiang Kai-shek must be rolling in his grave..
His KMT successors have abandoned the struggle against communism and goal of "retaking the mainland".

Thomas said...

The other night, I was running on a treadmill at my gym in Hong Kong. The markets had risen (again -- bubble anyone?) and the anchor said that the rise was mostly due to more confidence that China's market was rebounding. But China hadn't released any positive data that day, and as the main news program a few minutes later explained, the rise was fueled by actual positive data out of the US and Japan.

Once again, it is clear that China WILL rebound and this WILL pull everyone else out of the recession whether China actually can do this or not. If the media, pundits and politicians with special interests say it will happen, then it must happen. Whatever you think about Sarah Palin, she had the right idea when she told the audience at yesterday's press conference to mark her step down, "quit makin' things up!" What happened to the integrity of the media?

Aside from this annoyance at the lack of media oversight, I am dismayed that, aside from quickly mentioning that Ma ran unopposed, most reporters don't seem to be delving further into this.

Doesn't it strike anyone as odd that the leader of an authoritarian country calls the leader of Taiwan, who happens to now have nearly absolute power, to congratulate him on winning an election that he ran in unopposed? Nobody is reporting on anything but the surface appearances. It is shocking.

vin said...

"Doesn't it strike anyone as odd that the leader of an authoritarian country calls the leader of Taiwan, who happens to now have nearly absolute power, to congratulate him on winning an election that he ran in unopposed?"

It doesn't strike me as odd anymore, but yes, what gives with the internaional media not noting the triumph of ethnicity over ideology here -- and, as you say, the convergence in ideologies. My guess is that there is and has always been a "Chinese exceptionalism" (i.e. "The Other") at work in many Western minds, no less including the minds of most reporters.

Dixteel said...

I have noticed that media, even the big one like CNN, has the tendency to just "follow the crowd."

Right now, the west seems to have a China fever. It is reasonable given the many issues between the US and China.

However, this makes everyone just attribute everything to China, and forgot about other factors. I also notice they tone down or ignore negative news about China, probably because those media do not want to touch on too sensitive issues in China to offend their many Chinese viewers. The result is a relatively more positive than reality image of China in the media.

The news from Hong Kong which Thomas mentioned, IMO, might be a little bit more. Those news could be subtle propaganda of Chinese government in Hong Kong. Basically by attributing everything (good or bad) to China, they make people in Hong Kong unable to think without China in mind. This makes controlling the place much easier. The same can be said about Taiwan's media.

vin said...

"Basically by attributing everything (good or bad) to China, they make people in Hong Kong unable to think without China in mind. This makes controlling the place much easier. The same can be said about Taiwan's media."

-- Interesting point. Maybe. I hadn't previously thought of this focus as tactical.