Life in Taiwan is always fairly hectic, but the last few weeks have been extraordinary by any standards.
This tiny island, which is home to companies that collectively make up the world's third-largest IT hardware manufacturing force, has been suffering from both man-made and natural calamities. Ranging from domestic political chaos to the heavy rains and winds from typhoon Xangsane that lashed the island leaving floods and carnage in its wake, plus the devastating Singapore Airlines jumbo jet crash, it's all been bad news for Taiwan recently.
For the technology industry, which has been hit by plummeting stock prices resulting mainly from the political turmoil, the challenge now is to get back into a groove. The political scene here recently has been dominated by fear, doubt and uncertainty, with the inexperience of recently inaugurated President Chen Shui-bian's administration shining through in a series of moves that have left political observers and investors alike stunned with disbelief.
The October 27 announcement that Taiwan's newly reshuffled Cabinet had decided to scrap a partly-built fourth nuclear power plant, although far from unexpected, sent the island's financial markets into a tailspin that looked for a while like it was headed into a bottomless pit. Investors voted with their feet, and Taiwan's technology companies found themselves in the eye of the political storm. Fears of power shortages did little to shore up investor confidence, and as bears vastly outnumbered bulls, share prices headed straight down.
As a reminder of just how volatile Taiwan's power supplies already are, a November 2 fire in a Taiwan Power distribution station in Hsinchu, the heart of the island's high-tech industry, forced chip makers to shut down manufacturing plants for several hours, costing millions of US dollars in lost productivity. In decidedly non-free-market initiatives, the Government, meanwhile, has tried to halt the slide by halving the daily downward limit on share prices to 3.5 per cent by dipping deep into its "stabilisation" fund coffers to shore up their value.
It remains to be seen whether the Government's moves will be able to boost investor confidence. The main index on the Taiwan Stock Exchange hovers around levels last seen in the mid 90s, and market analysts are finding themselves as confused and rattled as the rest of the investor community.
"The whole market is just crapping out, and still nobody knows when it will hit bottom," said one exasperated technology analyst at a foreign securities house, who asked not to be identified.
With the bears vastly outnumbering the bulls, even bellwethers such as contract chip manufacturing giants Taiwan Semiconductor Manufacturing and United Microelectronics can only watch their market capitalisation shrink along with their share prices.
Taiwan's currency has also hit the skids, as foreign investors pull out of the market, sending the local currency more than 3 per cent lower against the US dollar in recent months.
To put the damage into perspective, it's worth remembering that Taiwan managed to escape the 1997 Asian crisis virtually unscathed, dropping only a percentage point or so of gross domestic product (GDP) growth.
Government economic planners reportedly are now expecting GDP growth for 2000 to come in at least a few decimal points below earlier estimates of 6.57 per cent. Outside observers, however, are expecting even less, with Morgan Stanley Dean Witter & Co downgrading its projection to 4.6 per cent from an earlier forecast of 6 per cent, according to published reports.
To be sure, the technology sector is also suffering from outside forces. The island's memory chip makers in particular are seeing their share prices plunge, due to slumping prices and lower-than-expected growth in the global PC industry.
As political turmoil continues unabated, with the opposition mulling a recall motion against the president, more natural calamities may also be heading Taiwan's way. On November 6, Taiwan's Central Weather Bureau issued a sea warning for Bebinca, a tropical storm approaching the island from the South China Sea. Looks like there could be more rain still to come.