Hypothetically: if China invades Taiwan?

[d2reid]

Being retired has had a definite down side. I have more time to become more politically aware. And for the first time I have taken a small portion of my FIRE and invested in the stock market. Not going as well as expected, in to short of a time.

Anyway, Pelosi is visiting Taiwan and China is saber rattling. China keeps saying they still own Taiwan, will they try to overthrow the current government and install their form of government?

Kind of a rhetorical question as there are thousands of factors that will make that determination.

Thus the hypothetical question: If China invades Taiwan what will the stock market do?

 

[VanWinkle]

Go down.... until it goes up again. My best guess.

 

[NW-Bound]

Thus the hypothetical question: If China invades Taiwan what will the stock market do?

The whole world economy, not just the US stock market, will be down and stay down for a looong time.

Taiwan makes something like 92% of the world's most advanced chips, although I don't know how much of it is outside of the country (yes, I call Taiwan a country).

And China makes lots of other things that people take for granted. Not just knick-knacks sold at Walmart, but something like 35% of the world's air conditioners. A trade sanction against China will have more effects than the current sanction against Russia.

 

[jollystomper]

Thus the hypothetical question: If China invades Taiwan what will the stock market do?

The stock market IMHO will be the least of our concerns, especially for the long run.

 

[foxcreek9]

The stock market IMHO will be the least of our concerns, especially for the long run.

+1 yep

 

[Dash man]

It’ll be very messy. I’ve wondered if North Korea would take advantage of the timing too. If the US gets involved, Japan might also.

 

[ls99]

The military industrial system would make $$$$$.....$$$$$

 

[Gumby]

Being retired has had a definite down side. I have more time to become more politically aware. And for the first time I have taken a small portion of my FIRE and invested in the stock market. Not going as well as expected, in to short of a time.

Anyway, Pelosi is visiting Taiwan and China is saber rattling. China keeps saying they still own Taiwan, will they try to overthrow the current government and install their form of government?

Kind of a rhetorical question as there are thousands of factors that will make that determination.

Thus the hypothetical question: If China invades Taiwan what will the stock market do?

You could look to what the stock market did in August 1958, when the PRC shelled Quemoy and Matsu Island. It went up, and a 7 year bull market followed. Or maybe it will crash. I don't think anyone knows.

 

[foxfirev5]

The stock market IMHO will be the least of our concerns, especially for the long run.

Yep. Taiwan is not Ukraine.

 

[Pellice]

+1 yep

+2 I have been sleeping well through this downturn. I would not be sleeping well through that.

 

[W2R]

The stock market IMHO will be the least of our concerns, especially for the long run.

+1 yep

+2 I have been sleeping well through this downturn. I would not be sleeping well through that.

+3 Don't even want to think about it!

 

[Lsbcal]

Being retired has had a definite down side. I have more time to become more politically aware. And for the first time I have taken a small portion of my FIRE and invested in the stock market. Not going as well as expected, in to short of a time.

Anyway, Pelosi is visiting Taiwan and China is saber rattling. China keeps saying they still own Taiwan, will they try to overthrow the current government and install their form of government?

Kind of a rhetorical question as there are thousands of factors that will make that determination.

Thus the hypothetical question: If China invades Taiwan what will the stock market do?

It is China that is saber rattling. They are bumping up the nationalist sentiment for internal political reasons. They have no business telling our politicians what to do internationally.

What would I do if China suddenly invaded? I don't have a game plan. Some hedges would be to own US semiconductor stocks and probably also Samsung which is apparently #2 behind TSMC of Taiwan.

 

[Koolau]

The military industrial system would make $$$$$.....$$$$$

Hey, they need chips too!

 

[NW-Bound]

You could look to what the stock market did in August 1958, when the PRC shelled Quemoy and Matsu Island. It went up, and a 7 year bull market followed. Or maybe it will crash. I don't think anyone knows.

I did not know about the above incidence. But back in 1958, both China and Taiwan did not carry the economic weight they do now. China was still a backwater country until Nixon went visit in 1971 and opened trade with them.

 

[marko]

It could get ugly. I've spent way too many months in Hsinchu where the chip fabs are. I worry about my close Taiwanese friends.

Having said that, and not trying to be callous or provocative, I wonder how much for some, including many on this forum would be seriously impacted.

Inconvenienced, sure. But it seems to me that the pain of such events are always unevenly distributed. Maybe I've just gone through too many "end of the worlds" to expect my life to change too much?

 

[eytonxav]

Worried about an invasion of Taiwan, how many supply chains does China already control? Now they are buying up significant farmland in the US, doing things in the Panama Canal, spreading influence on college campuses and research projects and elsewhere around the world to expand their dominance. Forget Taiwan for a minute, but doesn't anyone have concerns about the big picture of what China is up to?

 

[Koolau]

I have no special insight into PRCs designs on Taiwan, but if they take a lesson from Ukraine, they may be a bit reticent to try something similar to what Russia has done. It's one thing to win a war and quite another to take over a people. What would remain following such a war? Probably a wasteland similar to much of Eastern and Central Ukraine. Perhaps I've misjudged PRC but I think they are relatively pragmatic, though they are also quite determined to "reunify" - whatever that means. YMMV

 

[Koolau]

Worried about an invasion of Taiwan, how many supply chains does China already control? Now they are buying up significant farmland in the US, doing things in the Panama Canal, spreading influence on college campuses and research projects and elsewhere around the world to expand their dominance. Forget Taiwan for a minute, but doesn't anyone have concerns about the big picture of what China is up to?

Yes. I am quite concerned. I'm even more concerned that our gummint seems to welcome (or at best ignore) the obvious. Not much I can do - for a while yet. YMMV

 

[arcyallen]

The stock market is forward looking and is valued, in part, based on what people -think- is going to happen. That means if you're thinking about it, others are too and the market reflects that to some degree. Many times "bad news" is announced, but the markets shoot up. Why? Because people figured "worse news" was coming, and instead got a pleasant surprise.

The quick answer? No matter what anyone tells you, no one knows. Look at the daily Covid headlines since March 2020 and see if you can match up market movements with them. It cant be done! It's too seemingly erratic.

 

[Koolau]

The stock market is forward looking and is valued, in part, based on what people -think- is going to happen. That means if you're thinking about it, others are too and the market reflects that to some degree. Many times "bad news" is announced, but the markets shoot up. Why? Because people figured "worse news" was coming, and instead got a pleasant surprise.

The quick answer? No matter what anyone tells you, no one knows. Look at the daily Covid headlines since March 2020 and see if you can match up market movements with them. It cant be done! It's too seemingly erratic.

Yeah, even looking in the rear-view, I can never understand what the market HAS done. No way to predict what it MIGHT do. YMMV

 

[d2reid]

Thanks for all the responses. I guess the investing in the stock market is like riding a new whitewater river, you have the guide that can give you and idea of what may happen, but you won't really know until your boat hits the rapids.

To my question, it looks like the consensus is that you can't really tell. War effort stocks may go up, US based critical supply manufacturers may go up, otherwise it will probably go down, but may not.

 

[Koolau]

Thanks for all the responses. I guess the investing in the stock market is like riding a new whitewater river, you have the guide that can give you and idea of what may happen, but you won't really know until your boat hits the rapids.

To my question, it looks like the consensus is that you can't really tell. War effort stocks may go up, US based critical supply manufacturers may go up, otherwise it will probably go down, but may not.

Heh, heh, you catch on quick!

 

[Keim]

...doesn't anyone have concerns about the big picture of what China is up to?

I came to the conclusion 20 years ago that we were in an economic war with China and simply too short sighted to realize the long term importance of it. Their centralized govt works with long term plans. We cant seem to see past the next quarterly profit statement.

 

[NW-Bound]

I came to the conclusion 20 years ago that we were in an economic war with China and simply too short sighted to realize the long term importance of it. Their centralized govt works with long term plans. We cant seem to see past the next quarterly profit statement.

We enjoy the cheap goods from China, and it comes with a cost.

Same as Western Europe enjoying the natural gas from Russia, and it comes with a string, no call it a chain, attached.

It's damn hard dealing with countries ruled by despots. How we can win, I don't know.

 

[ls99]

I came to the conclusion 20 years ago that we were in an economic war with China and simply too short sighted to realize the long term importance of it. Their centralized govt works with long term plans. We cant seem to see past the next quarterly profit statement.

US companies willfully moved or sold pruduction of many things to China. Many designs and technologies they stole. China can only prosper if there is a huge market that wants the stuff they make, steel, aluminium, widgets and gizmos. They also rely on unfettered availabilty and transport of raw materials from areas (continents) elswhere.
Should either the raw material supply chain from elsewhere or the exporting of stuff to willing buyers get disrupted far any signioficant time, they are toast.
Seems to me the only long game the chinese play is printing of money.
There is nothing they make that can not be produced elsewhere, like here in the US, albeit at higher manufacturing cost. Likely the quality would better, so less of a throw away mentality would prevail.