DOCSLIB.ORG

Taiwan Stock Exchange Annual Report 2010

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Taiwan Stock Exchange Annual Report 2010 Annual Report 2010 Taiwan Stock Exchange Annual Report 2010 Taiwan Stock Exchange Corporation Taiwan Stock Exchange 9F, No. 7, Sec. 5, Xinyi Rd., Taipei, Taiwan 11049, R.O.C Tel: 886-2-8101-3101 Fax: 886-2-8101-3066 http://www.twse.com.tw 02-100403 May 2011 Message from the Chairman 2 and the President Statistical Highlights 5 Business Report Foreword 7 The Securities Market in 2010 8 Business Achievements in 2010 12 Objectives for 2011 25 Exchange Information The Executives 29 Board Members 30 The Organization 31 Market Activities Major Events in 2010 32 Listing Changes in 2010 36 Market Performance 39 Financial Review Report of Independent Accountants 41 Balance Sheets 42 Income Statements 44 Message from the Chairman and the President In 2010, the Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX) sustained an upward trend for the second consecutive year by opening at 8,207.85 points on the f irst day of trading despite global market volatility. Factors such as the European sovereign debt crisis, the slow recovery of the American and European markets, and Mainland China’s contractionary economic policies were all aspects of marketplace uctuations. The TAIEX fell to a year-low of 7,071.67 points on June 9, 2010. This downward movement was tempered in the second half of the year by increased global capital ows led by the second round of quantitative easing (QE2) in the United States. The Taiwan market also benef ited from the commencement of ECFA and improving economic ties across the Taiwan Strait, causing the TAIEX to rise steadily. It closed at 8,972.50 points on the f inal day of 2010, up 784.39 points or a 9.58% gain for the year. With the support of shareholders and the dedicated work of our sta, TWSE also attained a number of new Chairman President milestones in 2010, with the number of companies listed on TWSE reaching 784 (including 26 Taiwan Depositary Receipts, [TDRs]), 15 Exchange-Traded Funds (ETFs), and 10,043 new warrants issued. Over the past year, TWSE continued to work with regulators to push the stock market in the direction of greater liberalization and internationalization. A number of improvement measures were adopted in both the primary and secondary markets in order to enhance both operating e iciency and service quality, as well as bringing 3. Increasing f inancial innovation and the development of diversif ied, cross-border f inancial products TWSE in line with international practice. Some of these measures are outlined below: On December 8, the “Shanghai 50 ETF” became the fourth overseas ETF listed on TWSE, as well as the third direct cross-border ETF to list in Taiwan and the f irst cross-border A Shares ETF in the Greater China region. TWSE also 1. Enhancing fund-raising performance and the establishment of a high-tech and innovative worked to develop new indexes, launching the “Taiwan Employment Creation 99 Index” on December 30. This is a listing platform f irst-of-its-kind, aimed to encourage listed companies to fulf ill corporate social responsibility. A record 39 new companies, 21 local and 18 foreign, were listed with 6 primary listings by foreign companies, In 2010, the total number of new warrants exceeded 10,000, with average daily trading value and market share beginning in May of 2010. There were also 12 secondary listings (TDRs) by companies based in Hong Kong, growing exponentially. Eective September 1, 2010, domestic warrants based on foreign securities or indexes were Singapore, Thailand and other markets, demonstrating the attractiveness of Taiwan as a fund-raising platform allowed to be issued, with a total of 41 listed. for foreign companies. 4. Strengthening of cross-strait and cross-border international cooperation and communication 2. Promoting f inancial reform to better align with international practice TWSE continues to play an active role in international organizations such as the World Federation of Exchanges (WFE), Throughout 2010, TWSE devoted itself to furthering market development, raising service e iciency, and Asian and Oceanian Stock Exchanges Federation (AOSEF) and the International Organization of Securities aligning with international practice. TWSE continued to work with listed companies to strengthen corporate Commissions (IOSCO). TWSE also signed Memorandums of Understanding (MOU) with the BATS Exchange in the governance and encourage detailed disclosure, while also working with TDR issuers to ensure synchronized United States and Hanoi Stock Exchange in Vietnam, while also hosting “Taiwan Investment Forum 2010” in New York, information transparency on TWSE and on their primary exchanges. TWSE also strongly encouraged listed London, Edinburgh, Paris and Shanghai. These events facilitated one-on-one meetings between listed companies and companies to adopt XBRL f inancial reporting, achieving an adoption rate of 95% during the May 2010 international investment institutions. TWSE arranged interviews with local media in Tokyo, London, Singapore, China voluntary reporting period. XBRL reporting was made compulsory in September 2010, a measure fully enforced and the U.S. to raise international awareness regarding the Taiwan capital market. by TWSE. Moreover, the launch of the “XBRL Information Platform” on the new Market Observation Post System website allowed investors to browse and download XBRL f inancial data. The platform also includes a section Looking forward, TWSE will continually seek to elevate the international competitiveness of its fund raising platform, where investors can analyze and compare the f inancial performances of listed companies more conveniently. while also enhancing information transparency, establishing a cross-border regulatory system, strengthening its promotional activities overseas and raising the visibility of the Taiwan capital market. In the area of market reforms, TWSE remains committed to internationalizing its trading and clearing systems, which included the TWSE will work towards facilitating listing applications, boost trading exibility and strengthen the clearing system. implementation of continuous trading for warrants, shortening the latency for index and statistical information disclosure to 15 seconds, and the trading suspension system plan for listed securities and o-market TWSE will also facilitate the development of new and diversif ied f inancial products in order to internationalize its transactions. These services enhanced both market integrity and e iciency. capital market and satisfy the needs of investors. To stay at the cutting edge of information technology, TWSE established a FIX Communications Protocol There is a strong relationship between the healthy development of the securities market and the national economy. Platform, which enables foreign exchanges and securities f irms to place orders and report trades directly with Facing the future challenges posed by globalization and the liberalization of international capital markets, TWSE will TWSE using international information exchange standards, and raising trading e iciency. TWSE also launched a cautiously and conscientiously provide comprehensive services to raise the competitiveness of our securities market second core trading system with a continuous trading function; all warrant product trades have been in order to become a global “Fundraising Platform for Hi-Tech and Innovative Industries”. transferred to this system. 2 Message from the Chairman and the President 3 Statistical Highlights Unit: NT$1,000/1,000 shares 2010 (251 trading days) 2009 (251 trading days) Stocks Total Trading Value 28,218,675,690 29,680,470,925 Average Daily Trading Value 112,425,003 118,248,888 Total Trading Volume 817,567,480 1,088,769,001 Average Daily Trading Volume 3,257,241 4,337,725 Taiwan Depository Receipts Total Trading Value 261,905,819 128,488,924 Beneficiary Certificates ETF Trading Value 199,576,486 197,837,265 Closed-end Funds Trading Value 222,026 511,753 Beneficiary Securities Total Trading Value 5,011,850 5,013,646 Warrants Total Trading Value 204,945,028 106,425,468 Corporate Bonds Total Trading Value 0 0 TAIEX* 8,972.50 8,188.11 Total Listed Companies* 758 741 Total Listed Shares* 581,128,050 577,289,895 Aggregate Capital of Issued Shares* 5,927,948,679 5,869,586,063 Aggregate Market Value of Issued Shares* 23,811,416,303 21,033,640,073 Number of Securities Brokers* 90 91 Number of Securities Dealers* 44 46 * Year-end 4 Statistical Highlights 5 Dazzling Progress Business Report Foreword As the global economy recovered in 2010, the Taiwan economy grew by 10.82%, the highest growth rate in 21 years. Most major stock markets around the world rose on the back of better economic gures, with the key exception of Mainland China whose stock market fell amid concerns of ination. The Taiwan securities market also maintained a steady upward momentum, with the TAIEX rising 9.6% over the year. Since restrictions on the use of proceeds by listed companies were relaxed in 2008, the fund-raising function of the Taiwan securities market has gradually recovered. In 2009, 10 foreign companies undertook secondary listings in Taiwan. In 2010, there were also 6 primary listings and 12 secondary listings by foreign companies based in Hong Kong, Singapore and Thailand, with the rst primary listing by a foreign company taking place in May 2010. This is a testament to TWSE’s eorts to attract foreign listings. There were a total of 39 listings in 2010, 21 by local companies and 18 by foreign companies, the highest number in recent years. Trading volumes for call (put) warrants and Taiwan Depositary Receipts (TDRs) also increased drastically compared with last year, demonstrating Taiwan’s ability to become an international fund raising platform. Heading into the future, TWSE will continue to commit itself to enhance the capital raising eciency of the Taiwan capital market, establish a fund raising platform for hi-tech and innovative industries, promote market reforms, further the market’s alignment with international practice, develop diversied cross-border nancial products and strengthen Taiwan’s international competitiveness.
Load more

Recommended publications
  • Taiwan Stock Exchange Jun. 9, 2018
    Foreign Listings on TWSE Taiwan Stock Exchange Jun. 9, 2018 1 Big U.S. companies like Apple Inc. and Pfizer Inc. have the world’s largest corporate bond market in their backyard. So why have they been rushing to Taiwan lately to issue debt? The reason: a feature of the Taiwanese bond market that—for now—makes it easy and relatively cheap for companies to redeem any debt they issue there before its due date. For sure, the Formosa bond market—so-called after the Portuguese Issuer Currency Scale name for the island—is tiny compared with the U.S.’s $8.6 trillion corporate bond market. Yet blue-chip companies including Apple, AT&T USD 5,344 mil. Pfizer, Verizon Communications Inc. and Comcast Corp. have each issued north of $1 billion of such debt this year. AT&T Inc. issued a Apple USD 2,377 mil. $1.43 billion 30-year Formosa bond with a 5.5% coupon earlier this month. Pfizer USD 1,065 mil. In the Formosa market, the call option adds only an extra 0.1 Verizon USD 5,214 mil percentage point to 0.15 percentage point in yield, compared with 0.8 percentage point to a full percentage point in other markets, Source: WSJ according to Deutsche Bank’s Mr. Stephen. 2 Outline I. Why IPO? II. Why Taiwan? III. How to List on TWSE? IV. Foreign Listed Companies on TWSE V. Summary VI. Appendix 3 I. Why IPO? 4 Benefits of IPO What Boss Worries ! The cost of regulatory compliance, business succession plan, dilution of shareholding etc.
    [Show full text]
  • Taiwan Stock Exchange Principles for Financial Market Infrastructure
    Taiwan Stock Exchange Principles for Financial Market Infrastructure Disclosure Report (CCP&SSS) Responding institution: Taiwan Stock Exchange Corporation Jurisdiction(s) in which the FMI operates: Taiwan Authority(ies) regulating, supervising or overseeing the FMI: the Securities and Futures Bureau of the Financial Supervisory Committee The date of this disclosure is 2018.9.12. This disclosure can also be found at http://www.twse.com.tw/ For further information, please contact [email protected] 1 TABLE OF CONTENTS I. Executive summary………………………………………………..…4 II. Summary of major changes since the last update of the disclosure…………………………………………………………….11 III. General background of TWSE……………………………………..12 IV. Principle-by-principle summary narrative disclosure……………13 Principle 1: Legal basis……………………………………………...13 Principle 2: Governance……………………………………………..15 Principle 3: Framework for the comprehensive management of risks……………………………………………………...22 Principle 4: Credit risk………………………………………………28 Principle 5: Collateral………………………………………………..39 Principle 6: Margin…………………………………………………..41 Principle 7: Liquidity risk…………………………………………...44 Principle 8: Settlement Finality……………………………………..51 Principle 9: Money settlements……………………………………...53 Principle 10: Physical deliveries…………………………………….54 Principle 11: Central securities depositories………………………..55 Principle 12: Exchange-of-value settlement systems………………55 Principle 13: Participant-default rules and procedures…………...55 Principle 14: Segregation and portability…………………………..57 Principle 15: General business risk…………………………………60
    [Show full text]
  • ICE® Factset® Taiwan Core Semiconductor Index (ICEFSTS)
    ICE® FactSet® Taiwan Core Semiconductor Index (ICEFSTS) Version 1.0 Valid from November 19, 2020 Contents Version History: ................................................................................................................................................ 1 1. Index summary .............................................................................................................................................. 2 2. Governance ................................................................................................................................................... 3 3. Index Description .......................................................................................................................................... 5 4. Publication..................................................................................................................................................... 6 4.1 Publication of Index values. .................................................................................................................... 6 4.2 Exceptional market conditions and corrections....................................................................................... 6 4.3 Changes to the Index ............................................................................................................................... 7 5. Calculation .................................................................................................................................................... 9 5.1 Calculation of the Index
    [Show full text]
  • Incoming Letter: Taipei Exchange Main Board and Taipei Exchange
    New York Paris Northern California Madrid Washington DC Tokyo São Paulo Beijing London Hong Kong James C. Lin Partner Resident Hong Kong Partners Davis Polk & Wardwell 852 2533 3368 tel William F. Barron* Gerhard Radtke* Hong Kong Solicitors 852 2533 1768 fax Bonnie Chan* Martin Rogers † The Hong Kong Club Building [email protected] Karen Chan † Patrick S. Sinclair* 3A Chater Road Paul K. Y. Chow* † Miranda So* Hong Kong James C. Lin* James Wadham † Hong Kong Solicitors * Also Admitted in New York † Also Admitted in England and Wales August 29, 2019 Re: Application for Designation of the Taipei Exchange Main Board and Taipei Exchange Bond Market as a “Designated Offshore Securities Market” Michael Coco, Chief Office of International Corporate Finance Division of Corporation Finance United States Securities and Exchange Commission 450 Fifth Street. N.W. Washington, DC 20549 Dear Mr. Coco: We are writing to the United States Securities and Exchange Commission (the “SEC” or the “Commission”) on behalf of the Taipei Exchange (the “TPEx”) to apply for the classification of a “designated offshore securities market” for purposes of Regulation S (“Regulation S”) under the U.S. Securities Act of 1933, as amended, for (i) the portion of the TPEx known as the Taipei Exchange Main Board (the “TPEx Main Board”) and (ii) the portion of the TPEx known as the Taipei Exchange Bond Market (the “TPEx Bond Market” and together with the TPEx Main Board, the “TPEx Platforms”). Designation is being sought in order to assist market participants to the TPEx Platforms who are eligible for the safe harbor provision provided by Rule 904 of Regulation S to satisfy the requirements specified in that rule when reselling securities “in, on or through the facilities of” the TPEx Platforms.
    [Show full text]
  • The Impact of the Global Economic Crisis on Cross Strait Relatiions
    Track Two Dialogue on EU-China-Relations and Cross Strait Relations London, LSE, 29-31 May 2009 A workshop jointly organised by Stiftung Wissenschaft und Politik (SWP), Berlin, London School of Economics (LSE), London and Shanghai Institutes for International Studies (SIIS), Shanghai, with the friendly support of the Robert Bosch Stiftung GmbH, Stuttgart. Discussion Paper Do not cite or quote without author’s permission The Political Impact of the Global Economic Crisis on Cross Strait Relations Christopher R Hughes London School of Economics and Political Science SWP Ludwigkirchplatz 3–4 10719 Berlin Phone +49 30 880 07-0 Fax +49 30 880 07-100 www.swp-berlin.org 1 In the years leading up to Taiwan’s 2008 elections a number of measures were planned by the CCP and the KMT to liberalise cross-Strait relations and give Taiwan’s economy a substantial boost under a future Ma Ying-jeou administration. Few people predicted that in September 2008 this process would be thrown into turmoil by the deepening of the global financial crisis. Policies that had been devised for improving cross-strait relations in the context of growth in world trade and investment have had to be reassessed in the context of a recession in Taiwan and a serious slowdown of the mainland economy. How this interplay between economic policy and public opinion plays out will be crucial for shaping the future of cross-Strait relations. While it is too late to predict the outcome, this paper will explore the importance of cross-Strait economic relations for Taiwan’s politics, make a preliminary assessment of the political impact of the economic crisis on cross-strait relations and point to some speculative scenarios for the future.
    [Show full text]
  • Liquidity Cost of Market Orders in Taiwan Stock Market: a Study Based on an Order-Driven Agent-Based Artificial Stock Market
    Liquidity Cost of Market Orders in Taiwan Stock Market: A Study based on An Order-Driven Agent-Based Artificial Stock Market Yi-ping Huang a∗, Shu-Heng Chen b, Min-Chin Hung a aDepartment of Financial Engineering and Actuarial Mathematics, Soochow University bDepartment of Economics, National Chengchi University Abstract This thesis construct an order-driven artificial stock market base on Daniels et al. (2003) model. We also use autoregressive conditional duration (ACD) model initiated by Engle and Russell (1998) to model duration or order size. We analyzed the transaction cost of ten securities, including stocks, Exchange-Traded Funds (ETFs) and Real Estate Investment Trusts (REITs), in Taiwan stock market and compared this result with the simulated cost of our models. We find that for those frequently traded securities, for example, TSMC (2330.TW) or China Steel (2002.TW), it is better not to incorporate ACD model of duration in the model, and for those not frequently traded securities, for example, President Chain Store (2912.TW) or Gallop No.1 Real Estate Investment Trust Fund (01008T.TW), it is better to incorporate ACD model of duration in the model. Our empirical estimates show that the liquidity costs of market order of these ten securities are generally smaller than 3%, and largely lied between -1% and 1%. We, however, find that simulation costs of market orders in our model, with a range from 0% to 10%, are generally larger than those of real data. One possible reason for this departure is that investors in stock markets generally do not place their orders blindly.
    [Show full text]
  • An Assessment and Analysis of Taiwan's Private Equity Environment
    This report was published in May 2020 by the US-Taiwan Business Council. The Council is a non-profit, member-based organization dedicated to developing the trade and business relationship between the United States and Taiwan. Members consist of public and private companies with business interests in Taiwan. This report serves as one way for the Council to offer analysis and information in support of our members’ business activities in the Taiwan market. The publication of this report is part of the overall activities and programs of the Council, as endorsed by its Board of Directors. However, the views expressed in this publication do not necessarily reflect the views of individual members of the Board of Directors or Executive Committee. © 2020 US-Taiwan Business Council The US-Taiwan Business Council has the sole and exclusive rights to the copyrighted material contained in this report. Use of any material contained in this report for any purpose that is not expressly authorized by the US-Taiwan Business Council, or duplicating any or part of the material for any purpose whatsoever, without the prior written consent of the US-Taiwan Business Council, is strictly prohibited and unlawful. 1700 North Moore Street, Suite 1703 Arlington, Virginia 22209 Phone: (703) 465-2930 [email protected] www.us-taiwan.org www.twitter.com/ustaiwan Edited by Lotta Danielsson Cover background by Freepik An Assessment and Analysis of Taiwan’s Private Equity Environment TABLE OF CONTENTS Foreword ....................................................................................................................................
    [Show full text]
  • Using Trading Mechanisms to Investigate Large Futures Data and Their Implications to Market Trends
    Soft Comput DOI 10.1007/s00500-016-2162-6 FOCUS Using trading mechanisms to investigate large futures data and their implications to market trends Mu-En Wu1 · Chia-Hung Wang2 · Wei-Ho Chung3 © Springer-Verlag Berlin Heidelberg 2016 Abstract Market trends have been one of the highly debated the existence of the momentum effect via applying these two phenomena in the financial industries and academia. Prior new trading strategies. Besides, we analyze the market trends works show the profitability in exploiting transactions via through the repeated simulations of random trades with the market trend quantification; on the other hand, traders’ stop-loss and stop-profit mechanisms. Our numerical results behaviors and effects on the market trends can be better reveal that there exist momentum effects in TAIEX Futures, understood by market trend studies. In general, the trading which verifies the market inefficiency and the market prof- strategies on the market trend include trend following strate- itability in exploiting the market inefficiency. In addition, gies and contrarian strategies. Following the trend, trading the techniques of random trades are also applied to the other strategies exploit the momentum effects. The momentum commodities, such as AAPL in NASDAQ, IBM, GOOG in strategies profit in a long position with the rising market NYSE, and, TSMC in TPE, and so on. Surprisingly, not all the prices, as well as in a short position with the decreasing mar- stocks have the momentum effects. Our experimental results ket prices. On the contrary, the view of contrarian trading show that some stocks or markets are more suitable for the strategy is based on the mean-reversion property, i.e., a long mean-reverse strategy.
    [Show full text]
  • Taiwan and Los Angeles County
    Taiwan and Los Angeles County Taipei World Trade Center Taiwan and Los Angeles County Prepared by: Ferdinando Guerra, International Economist Principal Researcher and Author Robert A. Kleinhenz, Ph.D., Chief Economist Kimberly Ritter-Martinez, Economist George Entis, Research Analyst February 2015 Los Angeles County Economic Development Corporation Kyser Center for Economic Research 444 S. Flower St., 37th Floor Los Angeles, CA 90071 Tel: (213) 622-4300 or (888) 4-LAEDC-1 Fax: (213)-622-7100 E-mail: [email protected] Web: http://www.laedc.org The LAEDC, the region’s premier business leadership organization, is a private, non-profit 501(c)3 organization established in 1981. GROWING TOGETHER • Taiwan and Los Angeles County As Southern California’s premier economic development organization, the mission of the LAEDC is to attract, retain, and grow businesses and jobs for the regions of Los Angeles County. Since 1996, the LAEDC has helped retain or attract more than 198,000 jobs, providing over $12 billion in direct economic impact from salaries and over $850 million in property and sales tax revenues to the County of Los Angeles. LAEDC is a private, non-profit 501(c)3 organization established in 1981. Regional Leadership The members of the LAEDC are civic leaders and ranking executives of the region’s leading public and private organizations. Through financial support and direct participation in the mission, programs, and public policy initiatives of the LAEDC, the members are committed to playing a decisive role in shaping the region’s economic future. Business Services The LAEDC’s Business Development and Assistance Program provides essential services to L.A.
    [Show full text]
  • Taiwan Stock Exchange Market Information Transmission Operation Manual
    Taiwan Stock Exchange Market Information Transmission Operation Manual (IP Feed Specification) Version: B.11.13 Document No.: O-104-A10 Produced by the Taiwan Stock Exchange Table of Contents 1. Introduction ............................................................................................................ 1 2. Connection Architecture ......................................................................................... 2 3. Data Format ............................................................................................................ 3 Format 1 Basic Data of Individual Common Stocks on TWSE Market ........................................................ 4 Format 2 Statistics of Auction Trading of Common Stocks on TWSE Market ........................................... 10 Format 3 Statistics on Auction Indices of Common Stocks on the Stock Market ....................................... 14 Format 4 Statistics on Auction Consignments of Common Stocks on TWSE Market................................ 19 Format 5 Stock Market Announcements ........................................................................................................ 25 Format 6 Real-time Auction Quotes of Common Stocks on TWSE Market ............................................... 27 Format 7 Statistics on Finished Fixed-price Transactions of Common on TWSE Markets ...................... 36 Format 8 Statistics on Fixed-price Transaction Consignments of Common Stocks on TWSE Market .... 38 Format 9 Trading Information of Individual Common Stocks
    [Show full text]
  • Taiwan Stock Exchange Corporation Press Release 2021/01/05 Corporate Planning & Strategy Department
    Taiwan Stock Exchange Corporation Press Release 2021/01/05 Corporate Planning & Strategy Department Taiwan Stock Exchange 2020 Year-end Press Conference Good afternoon, everyone: Thank you all for participating in the Taiwan Stock Exchange (TWSE) 2020 Year-end Press Conference despite your busy schedule. I sincerely appreciate your prolonged support of and guidance on the company’s business. Meanwhile, I would like to take this opportunity to share the development of the stock exchange market over the past year and our future work plans. 1. Taiwan stocks have made historical achievements Last year (2020), the world was greatly affected by COVID-19. With the success of the pandemic prevention in Taiwan, listed companies have demonstrated their perseverance and resilience, and the overall economic growth reached 2.54%. In light of the accomplishments, Taiwan has won the honor to be one of the few growing economies in 2020 by the Economist report. Based on a solid economic foundation, the Taiwanese stock market has made a number of historical achievements. The TWSE Capitalization Weighted Stock Index closed at 14,732.53 points as of the end of 2020, an increase of 22.8% from the end of 2019. The market capitalization of listed companies reached NT$44.9 trillion, and the total trading value for the year was NT$49.2 trillion, with the average daily trading value exceeding NT$200 billion for the first time. With high stock market liquidity, the profits of securities firms jumped to NT$49.8 billion in the first 11 months of 2020, and securities transaction taxes reached NT$130.8 billion (estimated to be around NT$147 billion for the entire year), enabling the public to share the economic prosperity.
    [Show full text]
  • Elections and Political Risk: New Evidence from Political Prediction Markets in Taiwan
    Wesleyan Economic Working Papers http://repec.wesleyan.edu/ No: 2010-001 Elections and Political Risk: New Evidence from Political Prediction Markets in Taiwan Masami Imai and Cameron A. Shelton January 2010 Department of Economics Public Affairs Center 238 Church Street Middletown, CT 06459-007 Tel: (860) 685-2340 Fax: (860) 685-2301 http://www.wesleyan.edu/econ Elections and Political Risk: New Evidence from Political Prediction Markets in Taiwan. Masami Imai Department of Economics Wesleyan University [email protected] Cameron A. Shelton Robert Day School of Economics and Finance Claremont McKenna College [email protected] Abstract We examine the effects of party platforms on the economic opportunities of firms using a unique data set from a political prediction market in Taiwan, a country with two dominant parties whose political cleavage derives mainly from a single issue: the “One China Principle”. We find that during the 2008 Presidential campaign, the share price of Taiwanese firms with investments in the mainland responded strongly and positively to a positive electoral outlook for the KMT, the party which advocates lifting caps on cross-strait investment in mainland China. The response is strongest for those firms who have already hit their caps. Key Words: Partisan Effects, Taiwan JEL codes: P16, O16, E44 The authors acknowledge financial support from Wesleyan University and thank Peter Hull for excellent research assistance and Jie-Jun Tseng at Academia Sinica, Taipei, for generously providing us with the data from the Taipei Political Exchange. We also thank Richard Burdekin, Brock Blomberg, Richard Grossman, Anders Johansson, and Tom Willett for helpful comments.
    [Show full text]