# When China invades Taiwan: Where to Stocks and Bonds?



## Garpal Gumnut (9 April 2021)

I was running some scenarios with the yardman from the hotel last night and the small matter of Wolf Diplomacy by the Chinese cousins came up. I believe the CCP recently enjoined their hapless Ambassador in Canberra to front a movie worthy of a sixpenny seat in the stalls in the 1950's. From the description I received second-hand it was full of colour, happy peasants, flag waving and the glowing healthy faces of some Turks who inhabit a province of China. Its motive was to belie the bad press about the treatment of said Turks. I believe they are called Uyghers.

These performances have some parallels in history, prior to war being declared. 

I believe Mao was more than miffed when the Nationalists fled to Taiwan after they lost the civil war post WW2. So it is not without possibility that the grandchildren of his generation in China may wish to regain Taiwan as part of its imperialist ambition. Could this be the start of the beginning ?

Which takes me to stocks and bonds. 

I am hopeless at predicting their value in to the medium future. Thus I seek the combined wisdom of ASF members on this important matter to me.

Where to International Markets, the ASX and Bonds when China invades Taiwan ?

gg


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## tech/a (9 April 2021)

I know a few Taiwanese and they believe its not a matter of will but when.

If that did occur I dont think it would be limited to China and Taiwan.
As to bonds and the ASX ---I wont be caring about either!


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## Sean K (9 April 2021)

A few examples:


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## Dona Ferentes (9 April 2021)

> How often over the past decades have we been warned that the Taiwan Strait is a potentially explosive flashpoint? Often enough to numb the mind. So why should we pay attention this time? Because the pivotal reason that peace has endured for 70 years has disappeared. Unlike his predecessors, Xi Jinping, President of the People’s Republic of China (PRC), is no longer prepared to leave unification of the mainland and Taiwan to future generations.






> Xi has not only proclaimed that he wants to oversee movement toward unification during his lifetime, he has also repeated his predecessors’ message that Beijing will not renounce the use of force to attain its goal. These threats are credible. Unification is central to the legitimacy of the Communist Party of China (CPC) and to Xi’s vision of the ‘China Dream’...








						Policy Brief February 2021 - China Matters
					






					chinamatters.org.au
				





..... maybe buy pot stocks, because everything is likely to go up in smoke?


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## Sean K (9 April 2021)




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## Dona Ferentes (9 April 2021)

sorry about (lack of) clarity


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## Sean K (9 April 2021)

I'm not sure if they can invade. Still not enough amphibious ships. 

Plus, Quad and (some of) Nato won't let it happen, unless completely distracted elsewhere.  Maybe Russia and Iran will create a diversion. 

UK, France and Germany all sending ships into the Sth China Sea this year.


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## ducati916 (9 April 2021)

Looking at the earlier charts above, war is inflationary. Second, you never know who will actually win. Third, China is no Iraq. Fourth, China has categorically stated Taiwan is their's, I don't see them backing down on that.

Gold. It owes allegiance to no government.

BTC could get caught up in a cyber-war as part of a general conflict.






jog on
duc


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## qldfrog (9 April 2021)

From my Chinese limited experience, I agree it is a matter of when, not if.
And while many here will still hate Trump in their afterlife, as long as Trump was around, his supposedly irrational behaviour was keeping Taiwan safe;
With Biden, all that is gone and Xi is now sure he can use force without any military response of huge amplitude: no all out war;
As for Europe, it is now a toothless mangy kitten.
https://www.dw.com/en/brussels-chides-turkey-on-sofagate-von-der-leyen-snub/a-57124353
should I say more?
As for the French or UK fleets: ROL or ROC... for Crying...


So is Xi willing to actually play the hard side or can he just let the west self sinking itself at an unprecedented speed?
Remember Chinese leader do not have a poll deadline so they can wait as long as their population still has growing wealth and is happy, and they are.
When this stops for any reason is when Taipei can start heading for the bomb shelters.

Note: I am no strategist


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## Garpal Gumnut (9 April 2021)

Thanks @kennas . That att. above showing a 20% drawdown in the DJIA after Pearl Harbor is the one that caught my eye.  

So I guess to be conservative, a 40% drawdown should the West win and a brush up on my Mandarin should we not. 

gg


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## sptrawler (9 April 2021)

My off the cuff guess is that an invasion is expected and the chip manufacturing is currently being dismantled, leading to the shortage.
But I do love conspiracy theories. 😂
My suggestion @Garpal Gumnut , is to get a chip manufacturing plant going at the Ross Island resort, to go with the plentiful fish.
As the chip shortage will have a detrimental affect on far North Queensland, due to the fact it has very little going for it, other than your pearls of wisdom and great fishing.


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## sptrawler (9 April 2021)

qldfrog said:


> And while many here will still hate Trump in their afterlife, as long as Trump was around, his supposedly irrational behaviour was keeping Taiwan safe;



That is the key, no one likes playing Russian roulette with a loony, China now know that period is over IMO.
Hence the U.S plan Biden, dismantle the chip manufacturing ASAP, then get the hell out of there.
Just my opinion. but I would expect to see an increase in U.S chip manufacturing, because after Taiwan, one would expect South Korea to come into play.
I certainly hope not, but an ever increasing economy in a gigantic country under totalitarian control with a regulated currency, I can't see any limitations to their ambitions.
I don't think the PC crowd saying "aw play fair", is going to cut it, but hey you never know they have achieved heaps in Australia.


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## basilio (9 April 2021)

If this does end up in a shooting war  I wonder what the effect will be on the intertwined economies of China and the rest of the world.
For instance how much US bonds does China hold ? What happens to the trade in iron ore from Australia to China ?  What would be the effect on world computer chip supply if Taiwan companies were put out of commission ?

I also can't see how there will be "controlled" war. What happens if/when a US capital ship ie aircraft carrier is attacked and sunk ? The grim reality is that on all the war gaming scenarios played out by  the US military they get soundly beaten. I suspect that to "win" such a war the US would have to go nuclear - and that spells the end of all stock markets (not to mention everything else..)









						War games suggest the US will lose fast if it confronts China
					

The US Air Force simulated a war game against China last autumn, and the results were unsettling for Washington.




					www.trtworld.com
				











						Wargames: Losing Is Learning, Learning Is Winning
					

It is imperative the U.S. military learns from wargame losses.



					thediplomat.com


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## sptrawler (9 April 2021)

basilio said:


> If this does end up in a shooting war  I wonder what the effect will be on the intertwined economies of China and the rest of the world.
> For instance how much US bonds does China hold ? What happens to the trade in iron ore from Australia to China ?  What would be the effect on world computer chip supply if Taiwan companies were put out of commission ?
> 
> I also can't see how there will be "controlled" war. What happens if/when a US capital ship ie aircraft carrier is attacked and sunk ? The grim reality is that on all the war gaming scenarios played out by  the US military they get soundly beaten. I suspect that to "win" such a war the US would have to go nuclear - and that spells the end of all stock markets (not to mention everything else..)
> ...



Well it would certainly put climate change and electric vehicles on the back pages of the newspaper.


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## bux2000 (9 April 2021)

_And on a lighter note......_​​Kim Jong Un was sitting in his office wondering whom to irritate next when his telephone rang.​"Hallo, Mr. Kim!", a heavily accented voice said. "This is Paddy down at the Harp Pub in County Sligo, Ireland. I am ringing to inform you that we are officially declaring war on you!"

"Well, Paddy," Kim replied, "This is indeed important news! How big is your army?"

"Right now," said Paddy, after a moment's calculation, "there is meself, me cousin Sean, me next door neighbour Seamus, and the entire dart team from the pub. That makes eight!"

Kim paused. "I must tell you, Paddy, that I have one million men in my army waiting to move on my command."

“Jesus" said Paddy. "I'll have to call you back!"

Sure enough, the next day, Paddy called again. "Mr. Kim, the war is still on! We have managed to acquire some infantry equipment!"

"And what equipment would that be, Paddy?" Kim asked. "Well, we have two combines, a bulldozer, and Murphy's farm tractor."

Kim sighed. "I must tell you, Paddy, that I have 16,000 tanks and 14,000 armoured personnel carriers. Also, I've increased my army to 1-1/2 million since we last spoke."

"Holy shite!" said Paddy. "I'll get back to you."

Sure enough, Paddy rang again the next day. "Mr. Kim, the war is still on! We have managed to get ourselves airborne! We've modified Harrigan's ultra-light with a couple of shotguns in the cockpit, and four boys from the Shamrock Pub have joined us as well!"

Kim was silent for a minute and then cleared his throat. "I must tell you, Paddy, that I have 10,000 bombers and,10,000 fighter planes. My military complex is surrounded by laser-guided, surface-to-air missile sites. And since we last spoke, I've increased my army to TWO MILLION!"

"Ah bollix!", said Paddy, "I'll have to ring you back."

Sure enough, Paddy called again the next day. " G’ mornin' Mr. Kim! I am sorry to tell you that we have had to call off the war."

"I'm sorry to hear that," said Kim "Why the sudden change of heart?"

"Well," said Paddy, "we've all had a long chat over a lot of pints, and decided there's no feckin way we can feed two million prisoners."


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## Smurf1976 (9 April 2021)

ducati916 said:


> Looking at the earlier charts above, war is inflationary.



I'd think that would be especially so in terms of the price of manufactured goods when the war involves a country that makes rather a lot of stuff. 

Versus if the war was in some place that didn't have that attribute then there'd be less of an impact.


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## qldfrog (9 April 2021)

Smurf1976 said:


> I'd think that would be especially so in terms of the price of manufactured goods when the war involves a country that makes rather a lot of stuff.
> 
> Versus if the war was in some place that didn't have that attribute then there'd be less of an impact.



Very seriously, how long do you think our country could run without China?
Our sewerage and power systems, the factories and farm/mines
Any microprocessor, resistor, led, any electric motor or switch, etc  etc
With covid, 1y down the path and we still can not build 3ply paper masks...


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## sptrawler (9 April 2021)

Smurf1976 said:


> I'd think that would be especially so in terms of the price of manufactured goods when the war involves a country that makes rather a lot of stuff.
> 
> Versus if the war was in some place that didn't have that attribute then there'd be less of an impact.



I think Whyalla is an indicator as to the anxiety.


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## basilio (9 April 2021)

sptrawler said:


> Well it would certainly put climate change and electric vehicles on the back pages of the newspaper.




Be the least of our worries wouldn't it ?


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## sptrawler (9 April 2021)

qldfrog said:


> Very seriously, how long do you think our country could run without China?
> Our sewerage and power systems, the factories and farm/mines
> Any microprocessor, resistor, led, any electric motor or switch, etc  etc
> With covid, 1y down the path and we still can not build 3ply paper masks...



It is a small economy and population, it wouldn't be difficult to transition from ebay.
Two generations ago people survived without the $hit, people adapt, hungry is hungry, play station gets relegated to where it belongs. 😂
Bring it on IMO, a dose of reality is what's needed, way too much it's hard I don't like it, make it easier.


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## Smurf1976 (9 April 2021)

qldfrog said:


> Very seriously, how long do you think our country could run without China?



My point is more that we may have no choice other than to find out.

It's a bit like the pandemic lockdowns or something like a bridge falling down. Suggest that it's possible and you could argue for a decade with many saying that no, that'll never happen.

Then when it does happen the new reality comes into existence just like that. Ready or not it happens.


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## frugal.rock (9 April 2021)

There will be no invasion. "Infiltration" has been occuring for years now and a large percentage of the population travel to mainland China for work.
Taiwanese and Chinese merely have a difference of opinion over government.
If Honkers can just roll over after being British occupied, Taiwan is a doddle.
Han Chinese won't go and fight Han Chinese.
When dealing with Taiwanese business people, I haven't found a difference between them and mainland.

Can't help on the stocks or bonds issue.


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## sptrawler (10 April 2021)

basilio said:


> Just a bit of perspective about war and devastation.
> 
> I just finished watching a doco on SBS.  It was the final of a 3 part series on the German blitz on Liverpool in May 1941.  Seven nights of hellish bombing that  killed thousands of people and destroyed  tens of thousands of homes and buildings. The suffering and tenacity of those people ..
> 
> ...



Yes my Mum was 12 through that and my dad was 14, my grandfather shipped troops from Singapore to India, my father was 16 before he actually met his father.
A real crap time and ended up with real crap families, trust me. lol


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## qldfrog (10 April 2021)

frugal.rock said:


> When dealing with Taiwanese business people, I haven't found a difference between them and mainland



Actually, I experienced a stunning difference between the few Taiwanese persons i met and the many,many,many 😊 mainland Chineses .deep cultural one.
Taipei did not wipe its culture during the cultural revolution and they kept other gods than money.
A much softer culture..but that makes them even more fragile.
As for the effects,not sure i know..really depends onhow outraged the west will pretend to be.
Realistically, Asia will just say ok.US will probably have soft trade sanctions,leaving Xi giggling
And causing a real issue here between making a political stance and real politics
Europe will make a stronger posture but still economic, reducing sales of  Audi BMW and german machinery...
we could see the first full scale cyberwar with China doing business as usual behind their own wall,tested during 2 decades while they collapse our free for all network.
.Will not hurt having physical gold and a bit of cash on hand.
agree that BTC would be a concept if internet is down for weeks or months
We will suffer but market will be closed or inaccessible.my2c view


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## over9k (10 April 2021)

Peter Zeihan has been predicting an east-asia oil tanker conflict for quite some time:













This following link explains the entire situation and how acutely aware the yanks are of the cards they are holding here and it is well, well worth a read: https://capitalistexploits.at/these-changes-promise-to-completely-change-global-markets/ 

and this link explains what china is doing about it: https://capitalistexploits.at/how-china-is-capturing-global-energy-market-share/


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## basilio (10 April 2021)

Russia is now massing troops and ordnance on the Ukraine border.  In fact this seems an even stronger flash point for a  war.
Has echoes of the USSR crushing the Hungarian uprising in 1956 while the  English and French were trying retake the Suez Canal.

I wonder if Russia and China are co-ordinating their foreign policy moves to divide world attention?

I think stocks markets  will  take a real beating if these  situations escalate. They are already toppy.









						Kremlin defends Russian military buildup on Ukraine border
					

Intelligence reports show Russian tanks and short-range ballistic missiles just 150 miles from Ukraine




					www.theguardian.com


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## qldfrog (11 April 2021)

Gun salute for Prince Philip




What  hope for Taipei if the UK navy needs Hazmat suit to shot celebration rounds?.😊
Beware the toxic fumes and the H&S inspectors...


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## kenny (12 April 2021)

qldfrog said:


> Gun salute for Prince Philip
> View attachment 122692
> 
> What  hope for Taipei if the UK navy needs Hazmat suit to shot celebration rounds?.😊
> Beware the toxic fumes and the H&S inspectors...



Guns on warships aren't as impressive as I remember as a kid...


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## frugal.rock (12 April 2021)

kenny said:


> Guns on warships aren't as impressive as I remember as a kid...



Yes, It looks like the job was outsourced to the local peashooters club... 

Phil was a bit bored with pomp and circumstance anyway.


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## Sean K (12 April 2021)

basilio said:


> I wonder if Russia and China are co-ordinating their foreign policy moves to divide world attention?



I think they are at they moment, not necessarily to actually launch, but to test out the plan. China's been testing Taiwan air defences for months just to find gaps and identify targets.

But, as we can see by the stock and bond stats, it'll be a buying opportunity more than anything.


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## over9k (12 April 2021)

This is all bull**** guys. Biden did this just to let the Chinese know that he could: https://www.bloomberg.com/news/arti...carriers-conduct-exercises-in-south-china-sea 

The yanks are laughing at them.


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## barney (12 April 2021)

bux2000 said:


> "Well," said Paddy, "we've all had a long chat over a lot of pints, and decided *there's no feckin way we can feed two million prisoners*."




I literally laughed out loud.  Thank you for the comic interlude @bux2000


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## sptrawler (12 April 2021)

Once Taiwans microchip manufacturing capability has been neutralised, why would the U.S go to war, the sabre rattling appears to be a time wasting excercise, agreement between Xi and Joe has probably already been done.
China has already admitted it has to develop its own microchip technology capability.


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## Dona Ferentes (12 April 2021)

sptrawler said:


> Once Taiwans microchip manufacturing capability has been neutralised, why would the U.S go to war, the sabre rattling appears to be a time wasting excercise, agreement between Xi and Joe has probably already been done.






sptrawler said:


> China has already admitted it has to develop its own microchip technology capability.



Neatly, I hope, bringing the thread back on topic.... From Antipodes APL discussing the portfolio it leads me to suggest *buy Samsung*:

"_Talking about supply chains, the global semiconductor chip shortage is showing no signs of slowing. You may have heard about storms in Texas and earthquakes in Japan hitting semiconductor production, but again, there’s a bigger picture at play.

We’ve been investing in semiconductors for a number of years now because we recognised significant structural growth tailwinds.
The world is digitising, workloads are moving to the cloud and 5G will facilitate a whole host of developments like better handset experiences, connected cars and autonomous driving. All of this requires more and more semiconductors to process increasingly complex tasks.

COVID has pulled forward some of these trends – think consumption of online content, e-commerce and remote working. This, combined with the rebound we are seeing in economic activity and a few supply issues, has resulted in the well-publicised global shortage.

*Taiwan Semiconductor (TSMC) and Samsung Electronics are the only two companies globally that can manufacture leading edge chips* for tech companies around the world. Both are top ten holdings in the APL portfolio._


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## rederob (12 April 2021)

Dona Ferentes said:


> Neatly, I hope, bringing the thread back on topic.... From Antipodes APL discussing the portfolio it leads me to suggest *buy Samsung*:
> 
> "_Talking about supply chains, the global semiconductor chip shortage is showing no signs of slowing. You may have heard about storms in Texas and earthquakes in Japan hitting semiconductor production, but again, there’s a bigger picture at play.
> 
> ...



You might be better off with SMIC.


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## over9k (13 April 2021)

I really hope I don't have to mention the massive, worldwide microchip shortage at the moment, but for those who don't know, entire car assembly plants have had to be mothballed because not even automakers can actually get their hands on the chips they need to produce their cars.



















I suspect they're going to take care of taiwan only long enough to become self-sufficient in microchips and then even the taiwanese, like the koreans virtually are already, are on their own. 

You don't place two aircraft carrier battle groups in the south china sea within spitting distance of the chinese coastline without reason. I would have thought that would go without saying, but apparently not.


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## Garpal Gumnut (13 April 2021)

Well that didn't take long. 

So let's leave the maps and strategy to Xi, and discuss the effect on stocks and bonds. 

https://www.theguardian.com/world/2...of-taiwan-air-zone-in-a-year-after-us-warning

gg


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## qldfrog (13 April 2021)

Garpal Gumnut said:


> Well that didn't take long.
> 
> So let's leave the maps and strategy to Xi, and discuss the effect on stocks and bonds.
> 
> ...



Samsung and the like of NVIDIA AMC could benefit but I suspect we have too short a view regarding the shift of manufacturing from Taipei to the west: China has really a grip on all the parts and even if we could make a CPU in the silicon valley, that is only a start:
https://www.reuters.com/article/us-chip-shortage-qualcomm-idUSKBN2B32OO
But facts will not break a great story, so in case of invasion Samsung and Intel etc will jump first just because they are western based , then when reality strikes, and no samsung phone has been produced, then Joe...will lift trade sanctions.....
So investment wise: samsung & the big americans mentioned above for a 1 month play only IMHO


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## Garpal Gumnut (13 April 2021)

qldfrog said:


> Samsung and the like of NVIDIA AMC could benefit but I suspect we have too short a view regarding the shift of manufacturing from Taipei to the west: China has really a grip on all the parts and even if we could make a CPU in the silicon valley, that is only a start:
> https://www.reuters.com/article/us-chip-shortage-qualcomm-idUSKBN2B32OO
> But facts will not break a great story, so in case of invasion Samsung and Intel etc will jump first just because they are western based , then when reality strikes, and no samsung phone has been produced, then Joe...will lift trade sanctions.....
> So investment wise: samsung & the big americans mentioned above for a 1 month play only IMHO



Its not that easy to place 10 or 20 lazy small ones on Samsung.

Any ideas on best way to buy Samsung shares or derivatives?

gg


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## qldfrog (13 April 2021)

Garpal Gumnut said:


> Its not that easy to place 10 or 20 lazy small ones on Samsung.
> 
> Any ideas on best way to buy Samsung shares or derivatives?
> 
> gg



indeed ...on the Korean stock exchange only, so your best bet seems thru ETFs..probably a South korean one..But expecting South Korea to boom while Taipei is being annihilated is a jump of faith, or you then get samsungs with others which will get wiped out...Sorry no solutions but buying gold, can of beans and ammos


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## Dona Ferentes (13 April 2021)

Garpal Gumnut said:


> Well that didn't take long.
> 
> So let's leave the maps and strategy to Xi, and discuss the effect on stocks and bonds.
> 
> ...



well that took even less time


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## Joe Blow (13 April 2021)

Opinions on what will happen to stocks and bonds (and global markets) if China were to Invade Taiwan please folks.

This thread is about financial markets, not military might.


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## rederob (13 April 2021)

Joe Blow said:


> Opinions on what will happen to stocks and bonds (and global markets) if China were to Invade Taiwan please folks.
> 
> This thread is about financial markets, not military might.



It begs the question of *WHY would there be a conflict*?

We could open threads on any number of hypothetical conflicts and their potential affects on markets.  But surely the basis of any such threads should have some meat?

And regarding military might, while there would be an immediate market effect from a conflict, the less immediate value of any transactions is going to be determined by the likely outcomes of the conflict.


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## Garpal Gumnut (13 April 2021)

Joe Blow said:


> Opinions on what will happen to stocks and bonds (and global markets) if China were to Invade Taiwan please folks.
> 
> This thread is about financial markets, not military might.



I do wish the keyboard warriors from General Chat would bugger off back there so that Members of Aussie*stock*forums could discuss matters of stocks and bonds.

What a mob of disruptive muppets. 

gg


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## Clansman (13 April 2021)

rederob said:


> It begs the question of *WHY would there be a conflict*?
> 
> We could open threads on any number of hypothetical conflicts and their potential affects on markets.  But surely the basis of any such threads should have some meat?
> 
> And regarding military might, while there would be an immediate market effect from a conflict, the less immediate value of any transactions is going to be determined by the likely outcomes of the conflict.




Well the first thing that springs to mind would be the Yuan would be devalued somewhat. The Chinese economy would be considerably smaller  and their ability to manufacture would be seriously compromised. The overall standard of living in China would drop to levels not seen for many years.  The value of Tek Screws would go up as local Chinese were forced to patch up their houses and cars due to insufficient infrastructure after conflict.


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## Joe Blow (13 April 2021)

rederob said:


> It begs the question of *WHY would there be a conflict*?




Perhaps that's a topic for another thread if it is something that someone wanted to explore in more depth.



rederob said:


> We could open threads on any number of hypothetical conflicts and their potential affects on markets.  But surely the basis of any such threads should have some meat?




It is certainly an idea that is currently being discussed in the media and is considered to be a real possibility by many. There can be many discussions about related issues, but you can't have all of them in the one thread.

I'm happy for those who wish to discuss how or why such an event might come to pass, or which country has a better military force or more military might, to do so in a thread dedicated to those propositions.

There is nothing to stop anyone from starting a new thread about any topic.


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## Clansman (13 April 2021)

Joe Blow said:


> Perhaps that's a topic for another thread if it is something that someone wanted to explore in more depth.
> 
> 
> 
> ...




Yes we could start a thread where we count the number of super carriers in each countries arsenal or which country has the oldest warships in active service? It shouldn't take too long to get through that one.


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## Garpal Gumnut (13 April 2021)

Clansman said:


> Yes we could start a thread where we count the number of super carriers in each countries arsenal or which country has the oldest warships in active service? It shouldn't take too long to get through that one.



Well just start the bloody thread and let the rest of us get back to stocks and bonds. ffs. 

gg


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## Dona Ferentes (13 April 2021)

Hey GG, when the chips are down, the chips start flying, eh.  

But we have established Taiwan has a world class semiconductor biz and Samsung is the nearest likely contender. That's good.

I wonder if any other product, company, sector, is as pertinent?


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## Garpal Gumnut (13 April 2021)

Dona Ferentes said:


> Hey GG, when the chips are down, the chips start flying, eh.
> 
> But we have established Taiwan has a world class semiconductor biz and Samsung is the nearest likely contender. That's good.
> 
> I wonder if any other product, company, sector, is as pertinent?



Thanks DF. Semiconductor and other IT hardware will be affected. But in what way I don't know. I'm still unsure how to invest in Samsung which seems the major beneficiary. It is very tightly held, and ADRs I believe are traded in London and OTC in New Yawk. There are I believe some ETFs which lump in Samsung with some some other Asian stocks including some from China of all places. 

Oil and Gold should shoot up, as will old materials such as copper and iron stocks. 

Lastly it should see the end of bitcoin and "cwazy twading" which will take much young and restless money out of trading and return the charts to some normality. 

Generally there is a hit and a recovery with war, not as severe as a GFC though.

Interesting times.

gg


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## rederob (13 April 2021)

Joe Blow said:


> It is certainly an idea that is currently being discussed in the media and is considered to be a real possibility by many. There can be many discussions about related issues, but you can't have all of them in the one thread.



The basis for this thread is an hypothetical conflict.
The conflict will have an immediate market effect effect and a longer term effect.
Punters would need to react quickly once the conflict broke out if they were to gain on a gamble - the first move is always down in US markets if America is involved.
As the conflict outcome became clearer the extent of the downward movement would become clearer and stock prices would adjust accordingly.  
In the improbable event this hypothetical drew out, then the USA would need to issue* war bonds* because they are already deeply in the red. There is a real chance that a protracted war would turn US bonds into junk bonds.
Aside from that, Stock exchanges in different countries are likely to have counter movements.  European markets could well rise, and India's too as they will be beneficiaries from the scenario.
Were I a punter in such a scenario I would look for a bottom to the SSE Composite and dive in.


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## qldfrog (13 April 2021)

Garpal Gumnut said:


> Thanks DF. Semiconductor and other IT hardware will be affected. But in what way I don't know. I'm still unsure how to invest in Samsung which seems the major beneficiary. It is very tightly held, and ADRs I believe are traded in London and OTC in New Yawk. There are I believe some ETFs which lump in Samsung with some some other Asian stocks including some from China of all places.
> 
> Oil and Gold should shoot up, as will old materials such as copper and iron stocks.
> 
> ...



sorry but yes for Samsung, we have no luck in Aus. or even in the US:
https://www.aussiestockforums.com/t...-where-to-stocks-and-bonds.36185/post-1117747


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## Garpal Gumnut (13 April 2021)

rederob said:


> The basis for this thread is an hypothetical conflict.
> The conflict will have an immediate market effect effect and a longer term effect.
> Punters would need to react quickly once the conflict broke out if they were to gain on a gamble - the first move is always down in US markets if America is involved.
> As the conflict outcome became clearer the extent of the downward movement would become clearer and stock prices would adjust accordingly.
> ...



So presumably bonds in Australia would tank and interest rates rise thus giving the Government an out on runaway house prices.

Which might indicate a credit squeeze and calamity for the property market in the near term.

gg


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## Clansman (13 April 2021)

Garpal Gumnut said:


> Well just start the bloody thread and let the rest of us get back to stocks and bonds. ffs.
> 
> gg






rederob said:


> The basis for this thread is an hypothetical conflict.
> The conflict will have an immediate market effect effect and a longer term effect.
> Punters would need to react quickly once the conflict broke out if they were to gain on a gamble - the first move is always down in US markets if America is involved.
> As the conflict outcome became clearer the extent of the downward movement would become clearer and stock prices would adjust accordingly.
> ...




Actually you're wrong about the basis for the thread as you were about China's military capacity.
The basis of the thread was the effect on the ASX, stocks and bonds.
Considering we've already established that it is no more than the usual huff and puff Asian face saving exercise, then I would suggest that the thread is complete.


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## Joe Blow (13 April 2021)

I'm still tidying things up, but I have split off the posts related to comparing military might, and discussion about how and why a military conflict may occur over Taiwan, into a new thread.

That thread is located here: https://www.aussiestockforums.com/t...may-happen-and-military-might-compared.36191/

I am happy to alter the thread title if someone can suggest a better one.


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## rederob (13 April 2021)

Garpal Gumnut said:


> Thanks DF. Semiconductor and other IT hardware will be affected. But in what way I don't know. I'm still unsure how to invest in Samsung which seems the major beneficiary. It is very tightly held, and ADRs I believe are traded in London and OTC in New Yawk. There are I believe some ETFs which lump in Samsung with some some other Asian stocks including some from China of all places.
> 
> Oil and Gold should shoot up, as will old materials such as copper and iron stocks.
> 
> ...



In such a scenario as you originally proposed, China could take out TSMC and Samsung so that the USA had no access to cutting edge technology for their war effort, so avoid investments in the northern Pacific regions.


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## Garpal Gumnut (13 April 2021)

qldfrog said:


> sorry but yes for Samsung, we have no luck in Aus. or even in the US:
> https://www.aussiestockforums.com/t...-where-to-stocks-and-bonds.36185/post-1117747



Good point @qldfrog . Korean stocks get the jitters.

gg


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## Clansman (13 April 2021)

rederob said:


> In such a scenario as you originally proposed, China could take out TSMC and Samsung so that the USA had no access to cutting edge technology for their war effort, so avoid investments in the northern Pacific regions.




Not plausible. Taking out TSMC and Samsung is far more logistically challenging than taking out the garbage ?
You cannot take out TSMC and Samsung without an effective navy and China doesn't have one. Next please?


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## rederob (13 April 2021)

Garpal Gumnut said:


> So presumably bonds in Australia would tank and interest rates rise thus giving the Government an out on runaway house prices.
> 
> Which might indicate a credit squeeze and calamity for the property market in the near term.
> 
> gg



Australia's economy would go into an immediate nose dive.
Without China we are a land of flooding plains.
IF Oz aligned with the USA our major exports would lose their principal customer.


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## Clansman (13 April 2021)

rederob said:


> Australia's economy would go into an immediate nose dive.
> Without China we are a land of flooding plains.
> IF Oz aligned with the USA our major exports would lose their principal customer.




Wrong again. Australia would just adjust and sell it's raw materials to the countries that would subsequently be dividing up China.
Nothing would be lost.


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## Garpal Gumnut (13 April 2021)

rederob said:


> Australia's economy would go into an immediate nose dive.
> Without China we are a land of flooding plains.
> IF Oz aligned with the USA our major exports would lose their principal customer.



Good point.

No doubt a sudden market decline. 

Now just remind me why Menzies was called "Pig Iron Bob" prior to Japanese aggression. 

I presume there would be a 6-18 month realignment of markets for our quarries and farms. 

Gawd help Melbourne.

gg


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## Garpal Gumnut (15 April 2021)

The only market grouping I can see that will get an immediate push up from the conflict is the Rare Earths Sector. 

Pretty much everything else will initially go south on the ASX.

gg


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## rederob (15 April 2021)

Garpal Gumnut said:


> The only market grouping I can see that will get an immediate push up from the conflict is the Rare Earths Sector.
> 
> Pretty much everything else will initially go south on the ASX.
> 
> gg



Healthcare?
Miscellaneous services - funerals?


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## noirua (10 October 2021)

It is easy to say 'When China Invades Taiwan' just like someone might say, 'The Stock market Will Collapse'. It is an ongoing situation in both but maybe it will happen in 2121 when the ASX200 falls from 150,000 to 70,000. Or maybe in 2122 Taiwan will attack China from its base on the Moon and wipe out Beijing.  A counter attack on the Taiwan Moon base by forces from China on the other side of the moon, the dark side of course.

Anyway, China does not want to desecrate Taiwan from a business point of view. So they wont bomb Taiwan that is almost absolutely certain.

So China's President is manoeuvring in a game of verbal fisticuffs.  He is testing the Americans to see if after the Afghanistan debacle whether they are resolute enough not to back away from a war.  Will America go to the expense of building up war ships and aircraft carriers to fight off any efforts by China to just walk into Taiwan from the beeches or dropped off by planes.  The test might come when considering whether to directly attack Chinese ships.

The big problem is distance so there will be a need to build up the number of ships and submarines out of Australia. So America may well want a port and base to be able to defend Taiwan from Australia. This position was probably explained by President Biden to President Macron and forced Macron to back down and return its Ambassador.

The position concerning China and Taiwan may have been the principal one as to why America withdrew from Afghanistan.


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## StockyGuy (10 October 2021)

Seems most likely would be a relatively peaceful takeover, ie, no WW3.  Would be a hard one for AUKUS and NATO nations to justify to the masses if we made it an absolute line in the sand that we'd nuke 'em over.  It's hard to care too much about one Han state rejoining the Han state it was owned by last century, that sits on its coastline.  On polls a not insignificant percentage of Taiwanese either want reunification or don't have an opinion either way.

When it comes to the crunch, Taiwan is a high IQ nation so I'm sure they, the broad sweep of the populace, realise it's in no one's interest for their island to be the site of bomb craters and mushroom clouds.  They're a nation of business people who want to be rich - say what you will about the social controls China has, they also nowadays believe in a form of market economy as the best way to get rich.  Taiwan is not a nation of zealots.  The US also know this.

Could cause long bear market as China would become a pariah, kind of an apartheid-era South Africa, for a long time... lotsa trade sanctions for the West to save some face.  Obviously our mining sector could hurt as a result.  China would probably then have to cultivate stronger relationships with Islamic nations.

Expect a lot of Taiwanese immigrants/refugees to the West.


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## Sean K (16 October 2021)

Good discussion on the topic here.


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## againsthegrain (16 October 2021)

where we going to get our potato chips from then


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## Sean K (2 August 2022)

Vodka Pelosi is probably visiting Taiwan in the next few days. China say they will respond. Not sure what that could mean, but surely not any physical attack, that would be too much of an escalation. Perhaps a fly over the island with a bomber and some fighters, or a cyber attack. 

China supporters will be saying that the US have no right to visit Taiwan at this level of representation and they are the one's escalating the situation. 

Not sure how markets will be affected once China do invade. Will be bad juju if the semiconductor facilities in Taiwan are collateral damage going forward.


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## Garpal Gumnut (2 August 2022)

Sean K said:


> Vodka Pelosi is probably visiting Taiwan in the next few days. China say they will respond. Not sure what that could mean, but surely not any physical attack, that would be too much of an escalation. Perhaps a fly over the island with a bomber and some fighters, or a cyber attack.
> 
> China supporters will be saying that the US have no right to visit Taiwan at this level of representation and they are the one's escalating the situation.
> 
> Not sure how markets will be affected once China do invade. Will be bad juju if the semiconductor facilities in Taiwan are collateral damage going forward.



In my experience each time someone has uttered the words "will be bad juju" @Sean K it has been a worrisome few hours or days for me. 

gg


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## Dona Ferentes (2 August 2022)

And a timely resuscitation for this thread.  Of course, there has been a recalibration to what *WAR *will look like, now some practical experience of asymmetrical technologies has occurred on the Donbas, steppes and Black Sea. Mr Xi and his cronies will be thinking twice about a flotilla sailing across the strait, with Neptunes and HIMARS  and drones and satellites there to pick them off. They do have the advantage of proximity, whereas meaningful assistance for the Taiwanese is an ocean away.


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## Sean K (5 August 2022)

Well, I expected some fly-overs and a cyber attack, both of which occurred, but launching ballistic missiles into Taiwan and Japanese territory was probably an over-reaction. Especially into Japan's EEZ.

I think China is miscalculating here. Japan is the third biggest economy and has an extremely strong 'self defence' force. If you bring Japan into the game you bring in the US, then NATO. And, quite possibly, India.

The only peaceful solution to the Taiwan issue, IMO, is that they remain a self governing 'province' and mainland China leave them alone.

IRT the thread title, 'where to stocks and bonds', I think this would be very different to the feeble and inept Russian invasion of Ukraine and economic fall out. Surely China have seen what globalism of economies, resources and energy means when you are the bad actor.


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## sptrawler (5 August 2022)

Sean K said:


> Well, I expected some fly-overs and a cyber attack, both of which occurred, but launching ballistic missiles into Taiwan and Japanese territory was probably an over-reaction. Especially into Japan's EEZ.
> 
> I think China is miscalculating here. Japan is the third biggest economy and has an extremely strong 'self defence' force. If you bring Japan into the game you bring in the US, then NATO. And, quite possibly, India.
> 
> ...



My guess is, a lot depends on how much advanced chip manufacturing equipment and IP is still left there, if it is too difficult to relocate and or destroy, I would think if China gets hold of it the U.S tech sector would take a big hit.
The Chinese could destroy any advantage the U.S has in the AI and high tech space.  
Just guessing, as is everyone else.


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## Garpal Gumnut (5 August 2022)

Sean K said:


> Well, I expected some fly-overs and a cyber attack, both of which occurred, but launching ballistic missiles into Taiwan and Japanese territory was probably an over-reaction. Especially into Japan's EEZ.
> 
> I think China is miscalculating here. Japan is the third biggest economy and has an extremely strong 'self defence' force. If you bring Japan into the game you bring in the US, then NATO. And, quite possibly, India.
> 
> ...





sptrawler said:


> My guess is, a lot depends on how much advanced chip manufacturing equipment and IP is still left there, if it is too difficult to relocate and or destroy, I would think if China gets hold of it the U.S tech sector would take a big hit.
> The Chinese could destroy any advantage the U.S has in the AI and high tech space.
> Just guessing, as is everyone else.




I must admit I tend to have a more realist view of The China/Taiwan situation than most and I can see Taiwan returning to Chinese CCP rule very soon and I say that for a number of reasons. 

It is closer to China than to any other nation of an equivalent military size or capability, some 130 km at its closest point. This is the equivalent in distance of Melbourne to Wilsons Promontory, Sydney to Newcastle or Brisbane to Noosa.

China has expressed that Taiwan is part of China since the end of the Mao Zedong - Chiang Kai-shek kerfuffle in 1949 and has a majority close to 100% of its population in favour of re-unification. It has a large standing Army, Navy and Airforce capable of a swift and merciless invasion and neutralisation of the government in Taipei. Were it not for a strong USA it would have been completed decades ago. The USA is a power in decline, although still with a fair heft.

The recent blockade of sea lanes and military exercises including all three services and ballistic missiles capable of deterring any Western rescue have all but made any military response "problematic", as Mick Ryan AM would say. The blockade of sea lanes was done merely by the actions of an exercise. In a war it would be total. This would stop all commerce worldwide immediately and lead to a worldwide depression with civil disturbance in many nations on the edge.

Money talks, and the loss of chips and other IT hardware would cripple all Western nations in the event of conflict. The Big Money would stand aside and allow a takeover. 

Militarily the USA and its allies including us could have a fallback position to the Spratlys and continue to confine China militarily while the game of monopoly continued with shady heads of government in sunny city states such as the Solomons, PNG and all the other tiny towns bobbling about in a rising ocean.

This would lead to a new world order which hopefully might be more stable although this is not part of my polemic and one on which I will not in argument engage. 

The result of my scenario would be a Taiwan integrated as a Chinese province, the continuation of the West's over-reliance for IT hardware on China/Taiwan and a shift away from globalisation to remedy the latter. 

Sea and Air Traffic would resume after the takeover and a world-wide depression would be avoided. The results for the markets would be a boom rather than a bust should the present state of a Vodka Peolosi, as @Sean K so aptly described an otherwise elderly lady who with her 
President should really be out to pasture, muddying the waters from the USA which is replete with its own existential problems.

gg


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## Sean K (5 August 2022)

sptrawler said:


> My guess is, a lot depends on how much advanced chip manufacturing equipment and IP is still left there, if it is too difficult to relocate and or destroy, I would think if China gets hold of it the U.S tech sector would take a big hit.
> The Chinese could destroy any advantage the U.S has in the AI and high tech space.
> Just guessing, as is everyone else.




I'm not sure if China would target the semiconductor industry when they bomb Taiwan as it would be self defeating. And, I don't think China can actually take Taiwan by force. Taiwan's 100km+ moat protected from the N, E and S is too much.


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## sptrawler (5 August 2022)

Sean K said:


> I'm not sure if China would target the semiconductor industry when they bomb Taiwan as it would be self defeating. And, I don't think China can actually take Taiwan by force. Taiwan's 100km+ moat protected from the N, E and S is too much.



China would want to take the semiconductor industry intact, it definitely wouldn't want to damage it but the U.S might, just a thought.
If China did capture it intact it would be a major step forward for China in a technology sense and a major blow to the U.S tech sector dominance, I may not have explained myself well in the last post.


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## Sean K (6 August 2022)

*Thinking grand strategic planning*

I think the US is baiting China into a war against Taiwan. This will result in crippling sanctions and huge economic cost to China. The international community, less the autocratic States and those beholden to the B&R debt trap, will shun China for decades and severely weaken China. This could possibly lead to internal strife in China and the ultimate breakdown of the country resulting in the US emerging once again as the single superpower.

Just a thought.


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## sptrawler (6 August 2022)

I think the Russia/ Ukraine thing is a play, to see what the U.S has, the U.S isnt showing.
So China is stepping it up in Taiwan, but China is still not sure what the U.S has got and they are $hit scared they start something that gets their ar$e sent home in a basket, that would be the end of Xi.
Big gamble and he knows it. Just my opinion.


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## mullokintyre (17 August 2022)

Sean K said:


> *Thinking grand strategic planning*
> 
> I think the US is baiting China into a war against Taiwan. This will result in crippling sanctions and huge economic cost to China. The international community, less the autocratic States and those beholden to the B&R debt trap, will shun China for decades and severely weaken China. This could possibly lead to internal strife in China and the ultimate breakdown of the country resulting in the US emerging once again as the single superpower.
> 
> Just a thought.



The war mongerers that really run the USA would happily sacrifice Taiwan to the Chinese if it caused crippling sanctions against China.
They already have form.


> From The evil Murdoch Empire comes an interesting analysis by recently deposed Lib Candidate Dave Sharma.Throughout 1973, Egyptian forces along the Suez Canal regularly engaged in military exercises. Israel had captured the Sinai Peninsula during the 1967 war and Israeli forces were stationed along the canal’s eastern bank. During the spring and summer, on six occasions, Egypt conducted exercises that resembled genuine military operations. On two of those occasions Israel was sufficiently concerned that it mobilised its defence force, at great expense, only to stand down.Then on October 6, 1973, Yom Kippur in the Hebrew calendar, Egypt went further. Egyptian forces laid down pontoon bridges across the Suez Canal, breached the Bar Lev line, Israel’s defensive fortifications, and struck deep into the Sinai Peninsula.It remains Israel’s worst military disaster. Though the tide eventually was turned, the invasion stunned Israel. Israel suffered significant casualties and losses of equipment, and had to scramble to stop the joint Egyptian and Syrian advance. Asked afterwards why he had not mobilised Israel’s defence forces in October, Moshe Dayan, the defence minister at the time, conceded to having been tricked. Having already mobilised the defence forces twice, at great expense and for no purpose, he did not wish to be duped again.Egyptian president Anwar Sadat had succeeded in normalising high-intensity military operations in proximity to the de facto border. This was why, when he eventually chose to strike, it came as a surprise.





> Former ASPI Executive Director Peter Jennings says Beijing wants to push the key message “nothing is going to stop” China from taking Taiwan. Mr Jennings said Beijing is hoping Taiwan will be coerced into accepting an offer… of unification. “The risk of an aggressive action on the part More
> 
> The People’s Liberation Army now is engaged in the same preparation phase with respect to Taiwan. China has exploited the visit by US House of Representatives Speaker Nancy Pelosi to expand the dimensions of its military activity and normalise aggression across the Taiwan Strait.
> In the initial four days of the PLA’s live-fire exercises, according to Taiwan’s defence ministry, 41 Chinese vessels and 110 Chinese aircraft crossed the median line of the Taiwan Strait. Eleven ballistic missiles were fired into waters north, east and south of Taiwan. The drills subsequently were extended by the PLA by two days. These exercises served a valuable military purpose for the PLA: increasing preparedness, improving interoperability and providing valuable lessons for future operations across the Taiwan Strait. But they also served a more important strategic purpose.
> ...




Mick


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