US stocks → Taiwan stocks

Common explanation (Ripple · same direction): Electronics and semiconductors make up a large share of Taiwan’s market, which moves closely with US stocks.

This issue: US stocks at 94 (hot), Taiwan stocks at 99 (hot) — both above normal, in line with the common explanation.

Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.

Where it stands now

Where the two indicators stand this issue

US stocks: 84.4% above its 10-year average. Taiwan stocks: 171% above its 10-year average.

Tests

Does this link hold up?

Common explanationElectronics and semiconductors make up a large share of Taiwan’s market, which moves closely with US stocksSource: Anue (cnyes.com), reporting the Taiwan central bank’s report to the Legislative Yuan Finance Committee, “台股隨美股修正央行：與2019年底相比仍優於多數國家” (2022).
Tested against our dataAgreement between the positions of US stocks and Taiwan stocks (same month), measured in the direction of the common explanation: +0.62. Looking at every 5-year period (shifted one year at a time), the two moved in that direction in 14 of 15; data start only in 2007. Supported by the data
Periods when it did not holdAcross 15 5-year periods, out of step in 2010⁠–⁠2015.

History

The two lines, overlaid

Data: Professor Robert J. Shiller, public data; Central Bank of the Republic of China (Taiwan) (monthly average of the TAIEX, the Taiwan Stock Exchange Capitalization Weighted Stock Index). Positions: our calculation.

US stocksTaiwan stocks

Time lag

At what lag do they match best?

Longer bar = moves more in the direction of the common explanation (the number is the agreement).

same month+0.62
3-month lag+0.53
6-month lag+0.45
9-month lag+0.38
12-month lag+0.33
18-month lag+0.29

Limits

What this card cannot tell you

Moving together does not prove that one causes the other.
Links change over time; periods when this one did not hold are listed in full.
This is the historical record, not a forecast.

Back to all links