Russia’s invasion of Ukraine has foreign investors fleeing Taiwan. Here’s why

Over the last month, Russia’s Taiwan had been gaining traction as a foreign investment destination in recent years, with strategists often bundling it together with India, China and South Korea in a group of economies known as the But since late February, its shares have slipped more than 3% both in Taipei and New York. Taiwan’s tech stocks have also lagged the broader market, with the island’s tech index down 2% over the same period, according to Refinitiv data.Because of its “stranglehold” on the world of computer chips, “most of the Taiwan-related worries tend to be reflected in semiconductor stocks,” said Phelix Lee, an equity analyst at Morningstar.In a report to clients, he said that investors had two concerns: fears of a Chinese invasion, and anxiety over the supply of raw materials, including neon. Neon is a key component in the lasers used to produce chips. Lately, some neon suppliers in Ukraine have been forced to stop operating because of the conflict, raising fears that it could worsen an ongoing shortage in semiconductors.But if anything were to happen to Taiwan, there’s more at stake for the global economy than chips. The island is also an important manufacturer of high-end bicycles and sportswear, including factories for global brands, Huang added.Standing guardTaiwan’s currency has also suffered. It has gone from serving as a “regional safe haven to geopolitical risk proxy” in recent weeks, according to Bank of America.”Geopolitical uncertainties over Taiwan are the biggest drivers of portfolio outflows,” analysts there wrote in a note to clients earlier this month.They said that the Taiwanese dollar was “beginning to lag after a stellar year in 2021,” after being hit by “a sharp increase in risk aversion” following the Russian invasion.But despite the tension, many experts believe that Taiwan is safe for now.”Russia’s invasion of Ukraine does not up the near-term odds that China invades Taiwan,” Eurasia Group analysts wrote in their report earlier this month.They noted that “both Beijing and Taiwanese President Tsai Ing-wen have played down the connection between Ukraine and Taiwan,” and that there appeared to be “no preparations in Beijing and no panic in Taipei.” Still, Taiwan’s Foreign Minister Joseph Wu told reporters this month that the government was “watching very carefully what China may do to Taiwan.” The island also recently boosted some of its military training.’);$vidEndSlate.removeClass(‘video__end-slate–inactive’).addClass(‘video__end-slate–active’);}};CNN.autoPlayVideoExist = (CNN.autoPlayVideoExist === true) ? true : false;var configObj = {thumb: ‘none’,video: ‘world/2021/10/27/china-taiwan-president-intv-us-troop-presence-ripley-vpx.cnn’,width: ‘100%’,height: ‘100%’,section: ‘international’,profile: ‘expansion’,network: ‘cnn’,markupId: ‘body-text_43’,theoplayer: {allowNativeFullscreen: true},adsection: ‘const-article-inpage’,frameWidth: ‘100%’,frameHeight: ‘100%’,posterImageOverride: {“mini”:{“width”:220,”type”:”jpg”,”uri”:”//cdn.cnn.com/cnnnext/dam/assets/211027045437-01-tsai-ing-wen-interview-small-169.jpg”,”height”:124},”xsmall”:{“width”:307,”type”:”jpg”,”uri”:”//cdn.cnn.com/cnnnext/dam/assets/211027045437-01-tsai-ing-wen-interview-medium-plus-169.jpg”,”height”:173},”small”:{“width”:460,”type”:”jpg”,”uri”:”//cdn.cnn.com/cnnnext/dam/assets/211027045437-01-tsai-ing-wen-interview-large-169.jpg”,”height”:259},”medium”:{“width”:780,”type”:”jpg”,”uri”:”//cdn.cnn.com/cnnnext/dam/assets/211027045437-01-tsai-ing-wen-interview-exlarge-169.jpg”,”height”:438},”large”:{“width”:1100,”type”:”jpg”,”uri”:”//cdn.cnn.com/cnnnext/dam/assets/211027045437-01-tsai-ing-wen-interview-super-169.jpg”,”height”:619},”full16x9″:{“width”:1600,”type”:”jpg”,”uri”:”//cdn.cnn.com/cnnnext/dam/assets/211027045437-01-tsai-ing-wen-interview-full-169.jpg”,”height”:900},”mini1x1″:{“width”:120,”type”:”jpg”,”uri”:”//cdn.cnn.com/cnnnext/dam/assets/211027045437-01-tsai-ing-wen-interview-small-11.jpg”,”height”:120}}},autoStartVideo = false,isVideoReplayClicked = false,callbackObj,containerEl,currentVideoCollection = [],currentVideoCollectionId = ”,isLivePlayer = false,mediaMetadataCallbacks,mobilePinnedView = null,moveToNextTimeout,mutePlayerEnabled = false,nextVideoId = ”,nextVideoUrl = ”,turnOnFlashMessaging = false,videoPinner,videoEndSlateImpl;if (CNN.autoPlayVideoExist === false) {autoStartVideo = false;autoStartVideo = typeof CNN.isLoggedInVideoCheck === ‘function’ ? 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to the United States, wrote in a Washington Post op-ed published last week. “These are totally different things.” As for investor jitters, “we think the fear with regard to Russia has peaked already, and will fade away to become a secondary consideration,” said Huang. — Wayne Chang and Eric Cheung contributed to this report.