Taiwan crisis ahead

01.08.2022 – Disruptive fire from the Far East for the world’s stock markets: China is likely to tug at investors’ nerves in the coming days. That’s because Beijing has announced a military response if Nancy Pelosi, the speaker of the U.S. House of Representatives, actually visits Taiwan. Maybe this is just saber rattling. Perhaps the fuse for the next war is smoldering in the Strait of Formosa.

There is no sign of war in the DAX yet, but that could change soon. Here is the four-hour chart.

 

 

Source: Bernstein Bank GmbH

By the time you read these lines, the U.S. politician will already be in the region. Whether she will actually end up in Taipei is unclear. Of course, it is hard to believe that Pelosi’s visit is the real trigger for a military confrontation. True, the U.S. politician is number three in the United States. And the move could also be interpreted as recognition of Taiwan. In any case, China’s President Xi Jinping recently told the sick old man in the White House that whoever plays with fire will perish in it.

The opportunity is favorable
But China was probably planning an invasion of Taiwan anyway. And with a senile U.S. president whose son-man has also done good business in China – which you read little about in this country in the truth media – the opportunity is favorable.
In any case, the publication “1945,” run by security experts, analyzed that China has seen the U.S. on the road to decline for about a decade. And just like us, the website assumes that Joe Biden confirms this Chinese assumption – especially with the disaster of the withdrawal from Afghanistan and the tame response to the invasion of Ukraine. Thus, the Chinese leadership now believes it can do what it wants with Taiwan. Especially since there is a huge real estate and debt crisis raging in China, which Xi Jinping wants to distract from with a foreign policy adventure. The sales of the top 100 project developers in China, for example, were cut in half in the first half of the year.

China is becoming more aggressive
“1945” further reported that China does not need “provocation” by Pelosi – Beijing has been acting increasingly aggressively for some time anyway. For example, he said, China has already advanced into Ladakh in the Himalayas and is on the verge of occupying more Indian territory. China has also repeatedly blocked supplies to the Philippine atoll Second Thomas Shoal. Further, on July 29, four Chinese warships had entered the area off the Japanese Senkaku Islands claimed by China. Further, on May 26, a Chinese jet had fired tracer rounds at an Australian Boeing P-8 reconnaissance aircraft and also dumped chaff that was sucked in by the Australian’s turbines and set on fire.

The dragon lurks
Our conclusion: it would be no wonder if China strikes now. As the West weakens, the risk of war increases. And the risks for long-orientated traders and investors. Beijing could be right in assuming that America might offer a little resistance in Taiwan; but that is likely to quickly turn into appeasement.
In any case, Europe can be relied upon from the Chinese perspective. “Politico” in the U.S., at any rate, just reported that behind the scenes diplomatic activities in Europe are in full swing. Presumably, apart from the USA and Great Britain, no one will stand by the free part of China. But an occupation of Taiwan would have devastating effects on world trade. And an invasion would be a new shock to the stock markets. As always, we advise keeping an eye on the real-time news – even if the current Pelosi crisis ends smoothly, it is only a matter of time before the red dragon strikes. Bernstein Bank wishes you successful trades and investments!

 

 


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You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.