BUSINESS-ECONOMY
With South Korea's political scenario in shambles, the country's stock market is at risk of slipping even further behind Taiwan, a formidable tech rival that is enjoying the fruits of the worldwide AI boom. This year, Taiwan's stock benchmark, with a near-30 per cent jump, is on course to have its greatest performance since 2009. This has contributed to a historic divide between the two tech-dominated markets in Asia. Thanks to the growing reliance on Taiwanese enterprises by global AI powerhouses like OpenAI, Nvidia, and Microsoft, the island's market capitalisation has surpassed South Korea's by almost $950 billion. On the other hand, South Korea's KOSPI index has been one of the worst-performing major market indices globally, falling by about 8 per cent this year. Its performance gap with TAIEX of Taiwan has widened further this month. Many investors view Taiwan as less susceptible to increased tariffs by the incoming US president, Donald Trump, next year. Those views come despite both export-oriented economies at risk from trade tariffs. The reason is that American corporations rely on Taiwan's technology, and as a result, the Asian country has relatively better economic prospects. The recent uptick in investments in Taiwan's stocks, together with this sanguine outlook, bodes well for the Taiwanese dollar, which has performed better than the Korean win so far in 2024. Charu Chanana, Chief Investment Strategist at Saxo Markets in Singapore, said, "The structural theme of AI is likely only to get extended further, and this means we could see another year of Taiwan outperformance." Chanana added, "The Korea discount may linger for longer given the recent political debacle, and the corporate governance reforms will have to be prioritised to get any closer to erasing this discount." Yoon Suk Yeol, President of South Korea, is battling for his political life following the failure of his attempt to temporarily impose martial law in parliament to break a deadlock. The instability has dampened optimism for the country's future and might affect Yoon's much-touted corporate value-up initiative. This aims to increase shareholder returns and eliminate the so-called Korea discount, the historically low prices of Korean stocks. None
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