China Taiwan Conflict and its effect on stock market

Will Indian Stock Market Down Due To China-Taiwan War?

After the Inflation and recession fear the Indian and global stock markets are now concerned over the China-Taiwan war. The Pelonski visit to Taiwan increased China’s anger and it expresses it by imposing several sanctions on a small island. Moreover, It started military practice around Taiwan which increased the global tension.

Why Does China Want Taiwan?

Taiwan used to be part of China after world war 2 but due to the Chinese civil war, it becomes an independent country. China still considers Taiwan as its integral part and it doesn’t like it if anybody speaks on this topic as they consider it as their internal matter.

On the other hand, Taiwan considered itself an independent country. China is trying to kill 2 birds with one stone because acquiring Taiwan will give it an geopolitical edge and command over the flourished semiconductor industry.

The invaluable semiconductor resource

Taiwan is the largest producer of semiconductors in the world, while Tsmc has nearly 50% market share in the world’s semiconductor market. China is the biggest trade partner of Taiwan and is heavily dependent on it for semiconductor chips .

Additionally, American tech companies are overly dependent on Taiwan for semiconductors. You might have read the news that how the chip shortage affects the sales of Apple and other American companies. If China declares war against Taiwan then America will have to interfere in the war which will give an invitation to world war 3.

If china successfully acquires Taiwan then it can have better control over the world’s politics.

Why China is choosing aggressive Nature?

China will complete its 100 years of independence in 2047 so till then they want to become the most powerful nation in the world. The last 20 years were the golden period for china. Many analysts believed that the best days for china are behind them.

Watch this video to learn the intentions of china and its impacts on geopolitics.

How China-Taiwan war will affect the Indian stock market?

India is no exception to the dependence of semiconductors on Taiwan. In short term, there will be some tailwinds but always remember “In the short run, a market is a voting machine but in the long run it is a weighing machine.” – Benjamin Graham

Covid, Russia-Ukraine, Inflation, Recession, And Now China-Taiwan, the Stock market continues to be the busy thing for the people who follow everything.

Any body can fly

Which Stocks will affect by the China-Taiwan war?

automobile Stocks like Tata Motors, Maruti Suzuki, and other automobile stocks can get heavily impacted due to chip shortage. while the stocks like Dixon technologies will benefit from this crisis. Additionally, the world is looking for china plus one strategy. many companies are looking to set up plants in India that could benefit India.

How India is preparing for the China-Taiwan crisis?

2 years back government launched the PLI scheme worth 76000 cr to encourage companies to set up semiconductor plants in India. It puts India in a better position as Pegatron, a Taiwanese contract manufacturing company, has started manufacturing made-in-India phones.

Also, Read our blog on the ultimate guide to the basics of investing.

Several other Taiwanese and Indian companies like Vedanta, and Tata Elexi are planning to invest in setting up a plant in India.

Today whole world is interconnected so no one can afford one more world war. But the recent Russian-Ukraine war has boosted the confidence of Xii Xinping(Chinese president). So, the possibility of a war is quite high, since 2 days of dragon might be easy but he is definitely planning something to counter the dominance of the USA.

Closing words

Lots of people have lost money in simply predicting whether the stock market will go up or down. There will always be something happening in the world, so limit the noise and stay invested. Happy Investing!

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