May DPP Newsletter (English)

Here's the DPP's monthly newsletter for the international community, take a look and download!

May DPP Newsletter

There's a short and interesting read on a U.S. Fulbright Scholar's experience working in the DPP office in Taiwan for a year. It's good to see that some people are realizing that the next 4 years and the next election in 2012 are probably the most important years that Taiwan will face in terms of it's sovereignty, more so than in 2000.

Ma's Inaguration Speech

From English translations of his speech and commentary I've read, in short, my semi-optimistic look on Ma has now become pessimistic. All of that "Taiwan-first" talk during his campaign was hardly mentioned in his speech. Remember the talk about putting interests of Taiwan first, and listening to the people of Taiwan? Well, in his speech...

In resolving cross-strait issues, what matters is not sovereignty but core values and way of life.

Sovereignty and democracy go hand in hand. Sovereignty does not mean declaring independence, but it is what Taiwan currently has in its de facto sovereign state. So to say sovereignty doesn't matter, well then he's saying the people of Taiwan's right to decide for itself doesn't matter either. For a "Harvard-educated lawyer," that all the Western media like to tout him as, it's sad he failed to recognize the link between sovereignty and democracy.

Oh, and apparently Ma offended one of the pro-KMT aborigines with some sort of Han Chinese is better than all other sub-ethnic groups, and so that guy walked out in the middle of his speech. e-Props to him for standing up.

Pre-inaguration & LDK

Tomorrow Ma will become the next president of Taiwan. So far my trade on EWT has faired as I expected, again making it back to it's 6 month high of around 17.20. Depending on how it moves tomorrow, I may actually just sell it tomorrow. Reason being that Ma coming into office will surely be a catalyst for the market, but I believe the stock will pullback once again. Maybe not back to the 15s, but I could probably get a better price than what I entered at, being $16.31.

The real move up will happen when confirmation of cross-strait flights happen, which I have already stated that I don't believe will be as soon as many have hoped (July).

Moving on to LDK. I have a significant stake in LDK right now, and it tested it's resistance (200dma) of $40 and change today. It reached into the upper 42s but pulled back towards the close and finished the day at exactly $40.00. The next few days will be a good indicator of where LDK goes from here. A close above $40 tomorrow or over the next couple days would be extremely bullish. There's a number a good catalysts that could propel LDK back to the 50s with numerous solars reporting earnings over the next couple days. On the other hand, if LDK fails to take $40, looks like it will head back down to the 35s.

It really looks like a new solar "bubble" is building now. After the first bubble popped shortly after the turn of the new year, this new "bubble" seems to have started building in March and many of them have just begun to pick up steam this past week.

On watch: SOLF (earnings on Wednesday pre-market)

An ETF tracking Taiwan (EWT)

So I've been watching EWT for a while. EWT is an ETF that basically tracks Taiwan stocks, or simpler, the Taiwan Index. EWT recently made a run-up to a 6-month high at around $17.23, and has since pulled back. That run-up was during the week before the presidential elections in Taiwan, with it making a 6-month high after President-elect Ma Ying-Jeou was voted to be the next president.

So with Ma being sworn in on May 20th, I hope to see another run up in the price of EWT as Ma has stated he seeks closer economic ties with China. I entered this trade when EWT hit its 50DMA at $16.26 and will look to exit possibly in the low $20s. The stochastics are just below 20 with the %K possibly making a cross over the %D above 20 soon. Technically, it looks like a good time to enter EWT. My time-frame for this trade is about 4-6 months, as I don't think Ma will be able to start cross-strait weekend flights between Taiwan and China by July. But, if he does, that should once again start a rally of Taiwan stocks.

Ma promised economic growth, so let's see if he can deliver it. Otherwise, possibly selling us out to China and my investment in EWT, will both be for naught.