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Tuesday, December 06, 2005

[Foreign] Investing Taiwan.

The foreign emerging market we will talk about today is Taiwan. Taiwan what? You mean Tailand? No. Taiwan. Many people mistaken Taiwan with Tailand. However this little known island, located near the south east coast of China and south of Japan, is a crucial and stradegic location for United States to hold off the Chinese military expanding control into the Pacific Ocean. It is a water way connecting Japan and Phillipines for the USSR Seventh Fleet to navigate. Political wise it's a democratic government yet is still recognized worldwide as part of the China.

The recent island wide municiple election turned out to be a postive sign for foreign investors as the conservative party has seized control over most part of the island. The conservative party has been trying to establish communication with Chinese communist government and should benefit the island's economic outlook.

If you are not familiar of Taiwan, you probably have heard of Yahoo(YHOO). The Chief Director of Yahoo, Jerry Yang, who co-founded the internet portal giant with David Filo in 1994, is a native from Taiwan. Other US entrepreneurs from Taiwan includes BroadVision(BVSN) chairman and CEO Pehong Chen.

Not only in US, the island itself also has some respectable globally known corporations which are traded in Nasdaq. Trend Micro(TMIC), headquartered in Tokyo, Japan, is a Taiwanese company founded in 1988 by Taiwanese native Steve and Kenny Chang. The company is known by its award winning anti-virus detector PC-cillin. Another well known Taiwanese company in the semiconductor industry is Taiwan Semiconductor Manufacturing Co.(TSM), a leading wafer processing company founded by ex-Texas Instrument(TXN) VP Morris Chang. The company is located in Hsinchu Science Park, located 1 hour drive away from Taipei, which hosts a mega supply chain of semiconductor industry.

The semiconductor companys located in Hsinchu Science Park and are traded in Nasdaq include United Microelectronics Corp. (UMC), a direct competitor with TSM and Macronix International(MXICY) and memory chip manufacturer. Another company located in the science park is AU Optronics(AUO), a leading manufacturer of transistor liquid crystal display panel(TFT-LCD), the popular new display technology on your laptop, PC monitor and living room mega TV.

In the south at Nantze Export Processing Zone in Kaoshiung seaport you have Advanced Semiconductor Engineering (ASX) which offers semiconductor packaging and testing service.

Not only in the semiconductor industry, the entertainment and broadband internet provider GigaMedia(GIGM) should offer you some investment alternative as Taiwan is seeing aggressive growth in internet population.

If you don't want to take the risk of investing in foreign operating companys you may put your money in iShare MSCI Taiwan Index(EWT), a more balanced yet ETF alternative which equals investing in top Taiwanese equities.

If you want to know more about Taiwan, you may visit my travel blog which talks about various travel destinations in Taiwan.


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