- Nvidia CEO Jensen Huang's Taiwan visit boosts local stock market amid China tensions.
- Huang's arrival signals confidence despite recent Chinese military drills around Taiwan.
- Investors focus on tech stock indices over geopolitical risks, seeing buy opportunities.
Nvidia cofounder and CEO Jensen Huang is in Taiwan this week, where he's getting rockstar reception and boosting the stock market.
Huang arrived in Taiwan on Sunday a day after China wrapped up military drills around the island, which Beijing claims as its territory. Li Xi, a spokesperson for China's People's Liberation Army, said the exercise was a "strong punishment for the separatist acts of 'Taiwan independence' forces."
The drills started on Thursday, but Taiwan's stock market was little changed over the period. The market resumed its ascent on Monday following Huang's arrival — signaling confidence in Taiwan's massive chip sector that the world depends on.
Local media has been out and about on Huang's trail this week. The leather jacket-clad rockstar tech exec has been spotted dining with bigwigs from TSMC, Foxconn, and Asus.
On Wednesday, Huang also strolled through a night market with Morris Chang, the 92-year-old founder of chip giant TSMC.
He also appeared to have taken time out to visit his regular hair salon in Taipei, per the salon's Instagram.
Huang is scheduled to deliver the opening address at tech trade show Computex on Sunday.
Other high-profile global tech execs are also expected to deliver keynotes. They include AMD CEO Lisa Su — who is a distant cousin of Huang — Intel CEO Pat Gelsinger, Qualcomm CEO Cristiano Amon, and Arm CEO Rene Haas.
'PHLX Semiconductor Index matters more than the PLA'
The rally in Taiwan's tech-backed stock market contrasts with growing fears over China's military activities around the island.
Investors have to note that growing tensions among China, Taiwan, and the US will be a "permanent feature of the global landscape," wrote Rory Green, the chief China economist at GlobalData.TS Lombard, in a Thursday report.
However, for investors, "the PHLX Semiconductor Index matters more than the PLA," said Green, referring to the chip index hosted on the Philadelphia Stock Exchange that has gained 24% year-to-date. It's also up nearly 50% in the last 12 months.
In Taiwan, the island's TAIEX stock index has been breaching record highs this year on the back of the artificial intelligence frenzy on Wall Street that has boosted the stock price of US-listed Nvidia — whose largest supplier is TSMC.
The TAIEX index is up nearly 20% so far this year and hit a fresh all-time high on Tuesday.
"In this case, the AI equity theme, physical investment in AI, and the wider upturn in electronic component demand are driving robust Taiwanese growth and the strong stock market performance," wrote Green.
He added that an outright invasion of Taiwan by China is "very unlikely" due to high military and economic risk. Military preparations for an invasion would also be evident at least 12 months in advance — similar to the buildup near Ukraine before Russia invaded.
While a full blockade of Taiwan is a risk, Green said China is likely not willing to risk the severe economic, financial, and military repercussions it would bring because the East Asian giant is far from ready for international isolation.
Green said investors should view any geopolitical-driven sell-offs as a chance to get in at a lower price point.
"If the macro backdrop is positive and China remains far from achieving 'fortress-like' economic conditions, future sell-offs may offer attractive buying opportunities," Green wrote.
