This coming weekend, the Taiwanese people will head to the elections to vote for their eighth president. This could have no impact on cross-strait relations with Beijing, according to Pictet’s chief Asia strategist Dong Chen.
On January 13, Taiwan will undergo its eighth direct presidential election. Campaigning by candidates and their parties has been centered around several key topics including relations with Beijing, which considers Taiwan a rogue province, and the potential for conflict.
Some have spoken about the implications involved, not only regarding geopolitical risk but also to markets and the economy. According to Pictet Wealth Management’s chief Asia strategist Dong Chen, the strong focus on the elections may be overblown.
«No matter who eventually turns out to be the winner this weekend, I actually do not expect any major change in terms of cross-strait relations with Beijing,» Chen said during a media briefing attended by finews.asia.
No «Quick Fix»
Currently, the semiconductor business cycle has been favorable to industry leaders like Taiwan and South Korea. Nonetheless, Pictet is neutral on the Taiwanese market mainly because of richer valuations with many expectations already priced in.
«This Taiwan situation in the current global geopolitical background is getting increasingly tricky and I don’t see any quick fix in the foreseeable future,» commented Chen, who is also the Swiss private bank’s head of Asia research. «What’s more important for markets is still economy.»
Market Outlook
Overall, Pictet expects slower growth and disinflation in 2024 with central banks later cutting interest rates. World GDP is forecasted to decelerate from 3 percent in 2023 to 2.8 percent in 2024. Asia could see a moderate recovery with continued policy support in China, which is forested to grow 4.7 percent.
The bank prefers fixed income over equities in its global asset allocation strategy, with a focus on investment grade over high yield bonds due to challenging macro conditions for weaker companies. On equities, Pictet has also taken a more defensive position, preferring companies that can self-finance their operations.
