Tide turns for Taiwan

Emerging markets have been all the rage this year, but, unusually, the rising tide has not lifted all boats.

In Asia, the more popular markets (in South Korea, for example) have risen upwards of 40% already in 2005. However, over in Taiwan investors have had a tougher time of it: there, stocks have actually fallen 6% year to date.

But might things finally be on the turn? Analysts at Merrill Lynch think so, says George Hsu on Bloomberg.com. They have just started to recommend that investors buy in to the country in the wake of better-than-expected third-quarter GDP numbers and improving corporate prospects.

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Taiwanese companies are working off their inventories, orders are rebounding and earnings downgrades are coming to an end, says Leslie Norton in Barron's, with the happy result that, according to Citigroup, average earnings will rise a nice 23% in 2006 (company earnings in Korea are only forecast to grow 14% over the same period).

A good way to gain exposure to Taiwan is via an exchange traded fund. Barclays Global Investors have recently launched the MSCI Taiwan iShare (www.ishares.net).