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Nancy Pelosi’s Taiwan gambit is reshaping political risk in Asia

Written by Javed Iqbal

Nancy Pelosithe speaker of the US house, has come and go in Taiwan. In her wake have come missile overflights, enough discussion to briefly topple China’s Twitter-like microblogging service Weibo, the largest Chinese military exercises near the Taiwan Strait for decades – and for those on the island, a surreal sense of life takes place.

The markets reacted strongly, but not catastrophically. US 10-year Treasury yields fell to a four-month low ahead of Ms Pelosi’s arrival as investors fled for safety – then bounced back after her plane landed without incident. Taiwan’s main stock index, after falling sharply on Tuesday, has since bounced back. Shares of Semiconductor Manufacturing International Corp China’s national chipmaker, which also fell ahead of the visit, has gained 15% since her plane landed and China announced its military exercises. The S&P Defense and Aerospace Select Index has risen 9% since July 18, when news of Mrs. Pelosi’s planned trip first broke out, outpacing the S&P 500’s 8% gain.

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Javed Iqbal

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