- Posted August 19, 2014 by
This iReport is part of an assignment:
Life in China
Taiwan: Asian Top Business Hub
CEO | I.B. Capital Management
Today Taiwan has become one of the world's most successful economies over the past several decades, thanks to its favorable economic policies and proximity to China. With a gross domestic product (GDP) of $997 Billion in 2014, the country's economy is the 19th largest in the world by purchasing power parity, making it extremely important for international investors. Taiwan's economy is perhaps best known for its electronics industry. Since the 1960s, the country has evolved to become a leader in many areas of electronics, including the manufacturing of integrated circuits for computing. The country's exports totaled more than $300 billion in 2011 to primarily China, Hong Kong and the U.S. International investors are attracted to Taiwan for a number of different reasons. The majority of the newly industrialized country's economy is made up of small and medium-sized businesses, inflation has remained in check, unemployment is low, there's a significant trade surplus, and foreign reserves are the fourth largest in the world.
Public companies in Taiwan are traded on the Taiwan Stock Exchange, which had around 800 companies listed with nearly TWD 24 million in combined market capitalization in late 2010. The two most popular indices used by investors are the FTSE Taiwan Index and the MSCI Taiwan Index, which both track major publicly traded companies in the country. Best way to invest in Taiwan is to trade on Taiwan Stock Exchange and buy/sell stocks, bonds and MTF's, while this all are more easy way to start your first step in Taiwan. The easiest way to invest in Taiwan is using exchange-traded funds (ETFs), which offer instant diversification in a U.S.-traded security. With net assets of over $2.5 billion, as of December 2012, the iShares MSCI Taiwan Index ETF (NYSE: EWT) is the most popular option for investors looking for exposure to Taiwan's growing economy. The ETF holds approximately 117 different companies with a modest 0.59% expense ratio, but the largest company accounts for 20% of the fund's holdings, while information technology companies in general account for over 54% of the portfolio. As a result, investors may want to exercise caution when purchasing the ETF due to somewhat limited diversification.
Investors looking for an alternative may also want to consider purchasing American Depository Receipts (ADRs), which are U.S.-traded securities in foreign companies. Some popular ADRs trading in the United States include:
- Taiwan Senticonductor Manufacturing Co., Ltd. (NYSE: TSM)
- China Steel Corporation (PINK: CISXF)
- Asustek Computer Inc. (PINK: AKCPF)
After I analyzed benefits & risks of investing in Taiwan i found the following benefits: Solid Fundamentals and Diversified Trade Partners. Risks of investing in Taiwan includes: Strong explore to China, Geopolitical risks from China.
Totally I can submit the following reasons why i think that investing in Taiwan is the best idea for your finances:
1) Reputation of Taiwan
2) Growth of Taiwan
3) Safety in Taiwan
4) Business-Friendly Government Policies
5) Taiwan has a great toolbox
6) Yes, Taiwan is an economic hub
7) Taiwan's Social Environment
Honestly, Taiwan offers investors a unique opportunity to invest in a modern economy that benefits from its proximity to China and Southeast Asia. With a diverse high-tech economy, low inflation, and low unemployment, international investor would be a happy to start business in Taiwan