Part 18 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

Since then till 1993, I found Japan stock market, which had been falling for two to three years, showed no obvious rebound. And I noted that only if Japanese yen had appreciated, Japan stock market would fall. Most importantly, if the United States stated that Japanese yen still has much room for appreciation, it would do so and caused the downfall of the stock market. This especially impacted Japanese electronic industrial, that was acting high status, its stock price had terribly plunged much more than the index.

I finally realized the power of a country was considered as its most powerful and strong economic weapon. At the beginning of 1980th, Japan hold the world’s most powerful electronic industrial. American pilots knew their airplane would never fly without Japanese electronic component. Not very long ago American companies such as Inventec has grown significantly, and Microsoft has taken the place of world’s largest software maker. How about NEC, Toshiba and Fuju?

The truth is that American was worried about their airplane cannot fly and the weapon may cause problem without Japanese electronic technology. Therefore, the main target of Plaza Accord was to deal with Japan. Japanese yen had appreciated from 360 yen in 1973 to 79 yen in 1995 against one USD. Although Japanese was awesome, still couldn’t afford 400% of huge appreciation over a decade. This was a part of global market competition. Until then, I suddenly realize how important to consider the international political issue when viewing the financial and stock market. For it is the most significant influence to the market.

What called “individual companies’ revenue and profit" are the second consideration, because they are lack of total autonomy. Once the international political environment has changed, they will be impacted as well. According to the example of former American presidents. Only if Republican Party took role, America would get busy internally and externally. However, once Democratic Party replaced the role, it would give another look. Therefore, President Clinton oversaw a period of considerable economic growth and expansion during his tenure; George W. Bush resulted in bail out damaged financial institutions and a weakening economy.

To be continued…