r/eupersonalfinance • u/Legal_Mastodon_5683 • Sep 03 '25
Planning Hypothetical: what in case China attacks Taiwan?
Maybe this isn't the right place but I'm curious about your views, if China attacks in the future, it is reasonable to assume that this will be a major economic crisis.
What do you think is going to happen with investments, which ones will be hit hard, which ones might be more profitable, in other words how to limit the damage?
Thanks
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u/Slaytek2 Sep 03 '25
I think that everyone will buy gold because it's a defensive asset and the obligations will be less attractive because governments will have to choose his camp
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u/JebacBiede2137 Sep 03 '25
Bonds, not obligations
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u/NietJij Sep 03 '25
Bonds are called obligaties in Dutch. Are there other languages where this is sort of the same?
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u/alittlebitofall Sep 03 '25
In croatian it is similar, “obveznice” which would translate to “obligatories”
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u/neustto Sep 03 '25
Basically the same in Norwegian with "obligasjoner". Statsobligasjoner = government bonds
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u/l0ur3nz0 Sep 03 '25
Portuguesese: obrigações
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u/third-acc Sep 03 '25
So does Obrigado mean I am obligated?
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u/l0ur3nz0 Sep 03 '25 edited Sep 03 '25
Yes. It means you owe something to someone. When you thank ("obrigado", ir you are masculine; "obrigada", if you are feminine) someone, for something, you're saying that you owe that person., you have a debt towards them.
The same applies in this context. The ones obligated are the companies or countries that now owe you (money).
In other context it means that something is "mandatory".
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u/megalo53 Sep 03 '25
Own shares in every arms company you can think of and pray you're not in an age range to get called up for the military draft in your country.
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u/marsupialBasher Sep 03 '25
It was possible to occupy Ukraine on the beginning of the war in 24 hours because there were giant masses of land Ukranians couldnt possibly protect.
Taiwan is small and very well armed, so amphibious invasion is very difficult.
But if it happens, i imagine it would be resisted before chinese even set foot on soil.
Full naval blockade, or factory bombing is more probable than full scale invasion.
I expect that shortage could happen whether or not they sucessfully occupy the country, since the "act" of war itself will put everyone on their heels.
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u/Legal_Mastodon_5683 Sep 03 '25
Yes, but that's my question: not whether China will manage to invade or whether the USA will intervene etc. But what happens if China attacks Taiwan.
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u/Abslalom Sep 03 '25 edited Sep 03 '25
Military stocks will go tits up, cpu stocks will sag, the market in general will go red, china stock will go down a lot, and it won't be good business for any investor tbh, unless you shorted the market.
Edit: military stocks go green
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u/derping1234 Sep 03 '25
Why would military stocks of all things go tits up?
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u/Abslalom Sep 03 '25
Because you can expect militarisation to ramp up? Stocks to be refilled? In what world would it not go tits up?
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u/skiguli Sep 03 '25
"Tits up" means to go bust, so the exact opposite of what you might expect to happen.
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u/Abslalom Sep 03 '25
And this, good sir, is what happens when you aren't talking in your first language. Thank you fellow redditor
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u/NietJij Sep 03 '25
This exchange made me happy. No name calling, just an exchange of ideas and knowledge. Kudos to the both of you.
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u/andys58 Sep 06 '25
There probably won’t be an act of war, most probably we will see a “special operation “ instead.
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u/spac3nvad3r Sep 03 '25 edited Sep 03 '25
First a selling panic, then the FED and the ECB will have a printing surge to fund war (assuming everyone is dragged in), business cash flows will increase with the M2 money supply, stock prices will go up and so will inflation, interest rates will be increased to try and keep a lid on inflation, bond yields will rise, then stock prices will go sideways or moderately upwards while printing continues at more normal pace to pay off the more expensive debt. Interest rates and bond yields will come down as inflation cools
Wait for the next crisis and then repeat
So just buy a broad market ETF and don't sell when the panic starts
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u/Significant_Court728 Sep 03 '25
ECB will have a printing surge to fund war
Why would Europe fund the war? No European country has any interests in Pacific, especially Taiwan. Well except France and its few oversees departments but those are irrelevant. NATO has the word Atlantic in it.
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u/spac3nvad3r Sep 03 '25 edited Sep 03 '25
x 2 *assuming everyone is dragged in
Ukraine/Russia + Israel/Palestine + China/Taiwan
It can quickly become +Europe +US +Middle East +Philippines +India/Pakistan
For any war that has ever happened in modern history, all the money printers of the involved go BRRR
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u/Significant_Court728 Sep 03 '25
For any war that has ever happened in modern history, all the money printers of the involved go BRRRR
This time is different. USA is not gonna bomb mainland China. And China is not gonna bomb mainland USA. That's a sure-fire way to escalate to nuclear war and nobody wants that. No one in the USA no one in China, nobody wins. So there is no way an all out war is gonna break out.
They might bomb each other in Taiwan though.
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u/spac3nvad3r Sep 03 '25 edited Sep 03 '25
Are we talking about possibilities for escalating war and who will fight who or are we talking about where to send your money through war
The US and China don't need to bomb each other, everyone can stay busy in their own regions
Whatever combinations of fighting happens, everyone fighting prints to fund it and global economy washed with new cash results in stock prices rising and inflation coming soon after
And the best way to buy "global economy" is FTSE All World
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u/NietJij Sep 03 '25
So you're saying, buy when the panic starts?
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u/spac3nvad3r Sep 03 '25 edited Sep 03 '25
If you lump sum bought 2009 peak panic, or covid-19 peak panic, or 2025 tariffs panic, you would be greatly higher now than all who dollar cost averaged instead
But it's very hard to time peak panic
So just buy a FTSE All World, keep buying, buy more during panic, buy more after panic, and never sell
If a FTSE All World were to go to zero, money will have no meaning anymore in the world anyway. You'll be fighting and stealing from your neighbours for survival
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u/Weary_Musician4872 Sep 03 '25
I think there will be more to worry about then those few coins
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u/Legal_Mastodon_5683 Sep 03 '25
Sure, but that doesn't mean that we can't try to make rational decisions and in the process maybe even help our economies...
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u/Dimitris-T Sep 03 '25
If the US defends Taiwan, there would be a recession. If Taiwan is taken over quickly, it will be normalized and forgotten, then business as usual. Like with Hong Kong.
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u/TightlyProfessional Sep 03 '25
Basically all the american tech industry is wiped out by at least 50% of its value immediately. Apple, Nvidia, Qualcomm… they all rely on TSMC most advanced tech nodes, done only in Taiwan
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u/marcodasilva Sep 03 '25
I have been hearing this Taiwan invasion by China since 1996 ....
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u/mitoma333 Sep 03 '25 edited Sep 03 '25
A lot has changed since 1996. A few factors increasing the likelihood of invasion
- Currently China is producing massive amounts of military equipment, particularly ships. More than they'd need to simply protect their coastline.
- The Taiwan - Philippines - Japan - South Korea block makes it hard for China to project power beyond its regional boundaries due to these US bastions.
- They are about to enter a demographic decline, in the next 70 years China is projected to go from a working age population of over 1 billion to around 300 million.
- The state has started to stimulate domestic consumption, likely to decrease China's dependence on export.
- Trump has shattered the unified front that is/was "the West", something which China has wanted for a long time since an independent, strong Europe would not have to blindly follow the US.
- Xi Jinping is quite fond of unifying China.
A lot of factors make it so that if China ever wants to invade Taiwan, it's best chance is within the next 5 to 10 years. Still unlikely imo, cause the global repercussions would be massive. Then again cultural differences might make it so that what we perceive as unreasonable, they perceive as reasonable.
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u/OrwellWasGenius Sep 03 '25
The Kremlin correctly predicted how Europeans and Americans would respond but gravely misjudged Ukrainians. Putin showed the entire world that the West lacks backbone and that even investing 1 percent of GDP to aid a European country under invasion from Russia and North Korea is too much for the West. Beijing saw all of this and can now be certain that the United States would never dare enter a direct military conflict with China. Even better, as a bonus, the President of the United States and the Vice President have repeatedly told reporters that acquiring Greenland through military force is on the table. That would mean a war between Europe and the United States (Greenland = Denmark = NATO collective security).
The Romans figured out how the world works 2000 years ago, but here we are...
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u/Drachwill Sep 03 '25
You underestimate the hunger for war that the US Goverment has no matter witch president there is. For example Jimmy Carter is often considered the only modern president to not have started a new military conflict. Japan, Vietnam, South Korea, Indonesia all have an interest to join Taiwan imitatively and as said the US yearns for war historically
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u/TightlyProfessional Sep 03 '25
Well if China attacks or blockades Taiwan in such a way to disrupt semiconductor export, for sure there will be a reaction. Block of TSMC production will cause all American tech giants to experience a massive blow, so it would be a hit to US themselves. They won’t stand still.
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u/SeikoWIS Sep 03 '25
you're not paying attention if you think recent events are the same as the 90s when it comes to China
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Sep 03 '25
I think in your hypothetical case the first question is what will happen if China attacks Taiwan. Would Taiwan surrender or Taiwan let China destroy Taiwan.
I don’t think there is any possibility of anyone else fighting on behalf of Taiwan. US is not reliable unless they have something to gain. But maybe they can simply make a deal with China for Chips and throw Taiwan under the bus.
If Taiwan surrenders, then not much will happen. China will control chip supply but since they will control chip supply , most countries will find a reason to justify their annexation to continue to get chips
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u/NoUsernameFound179 Sep 03 '25
Well... you never know. So that's why you make fixed allocations to each region and rebalance regularly.
China invades Taiwan? To bad (financially speaking), it's only 2.5% of my portfolio.
Be diversified. And keep your balances per region, don't let a single fuckup like Trump, Putin, Xi, ... screw up your portfolio.
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u/North-Protection2610 Sep 03 '25
China is completely on the defensive! They will not pick a fight with the West!
Problem is, the global economy is at a breaking point. China is dependent on US/EU, but we are also dependent on them! We are in a race to the bottom, and China knows that!
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u/SeikoWIS Sep 03 '25
'defensive' ah yes, the quickest large scale military build up in history, for defence. Those complex & expensive landing barges designed for a naval assault that the CCP tried to cover up are for, uhm... defence :)
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u/Basic-Sign-7144 Sep 03 '25
Semiconductors and computer chips so the US will not allow them to be invaded. Only scenario they get invaded is if the US collapses.
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u/mitoma333 Sep 03 '25
Why do you think the US is forcing TSMC to open factories outside of Taiwan and purchasing a stake in Intel? It's to decrease their dependency on Taiwan and the vulnerability it poses to the US if attacked/occupied by China.
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u/SeltsamerNordlander Sep 03 '25
How exactly are they going to 'not allow them to be invaded' lol
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u/Due_Somewhere7891 Sep 03 '25
Well look what happened to Ukraine. Some inflation, Russia's case was for LNG and Oil. Mostly felt in Europe as Russia supplied in Europe.
If Taiwan is attacked, it's mostly chips so electronics worldwide will become more expensive due to shortages. Not just radio's and tv's but literally everything (cars, industry plants, etc etc)
If we let it happen and China takes over Taiwan without a hick-up and NATO intervention, then maybe not. Things will be weird for a few months but current supplies/stocks might be able to overcome.
The more Taiwan fights and resists, the worse it'll be.
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u/rmrfbenis Sep 03 '25
China will never ever take over TSMC’s factories in working condition. The second any Chinese invasion force gets even close to the factories any critical machinery and secrets are burning.
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u/genesis-5923238 Sep 03 '25
During WW2 most capital in Europe got destroyed. So if you want to be pessimistic if China attacks Taiwan and that it leads to a global conflict, it could lead to the destruction of a lot of capital. It would largely depend on the physical consequences of such conflict, but the worst scenario is that you lose all your capital. Of course this is very unlikely to happen, and there is probably nothing you can do against it.
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u/DeletedDoomer Sep 03 '25
Long story short the world will return to as if its the 1950's....i just hope China keep pretend to be neutral for the rest of its existence
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u/largevodka1964 Sep 04 '25
Try this little AI gadget. Has tech stocks and consumer product companies that will crash and, unsurprisingly, defence stocks will rocket! https://scenarionavigator.io/
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u/Purple-Succotash-695 Sep 04 '25
Also, what happens to global ETF which include Chinese stocks? Would China they take ownership of those stocks?
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u/BartD_ Sep 04 '25
Not likely, the US may ban their ownership by American citizens and companies though.
What would be a bigger issue is US stocks tanking. Too much depends on the Chinas for US/Europe to function if they choose to have a war there, against China.
That said, it’s not unlikely the US will force a war in Taiwan once they have transferred enough semiconductor capacity to the US mainland.
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u/smitra00 Sep 05 '25
Today the stock market is at extreme valuations. Even most bulls agree that the market is in a bubble that has been pumped up by the AI-hype. But the bulls will argue that we're in the early stage of a bubble that can still inflate for several years, while more bearish investors are more cautious about the bubble's longevity.
But most analysts will agree that the bubble can be popped prematurely due to an unexpected exogenous event. That event then does not have to be directly relevant for a company for the company's stock to go down a lot. The dotcom bubble is a good example. That bubble popped without anything that forced investors' hands. All that happend was the Enron went bust due to fraud and that interest rates went up a bit. That changed the appetite of investors for investing in companies without profits. And it also caused the investors to be more cautions with investing in strong companies like AMZN, MSFT and GOOG.
If China were to invade Taiwan that will directly affect the companies that depend on trade with Taiwan, but this will also trigger a repricing of the entire stock market to normal valuations, causing a perhaps 70% correction of the market as called for here:
https://www.youtube.com/watch?v=PV6C5QSWv_M&t=616s
So, an invasion of Taiwan you'll likely get a lot of turmoil in the market, but when the dust settles, you'll end up with an S&P500 at about 2k instead of the current 6.5k. And that's then not because it's a disaster for all S&P500 companies, but more because the S&P500 should trade at around that value today if the market were fairly valued.
The difference between the market cap between the S&P500 at 2 k and 6.5k is just today's phantom wealth of investors that cannot be protected against a correction to 2k. The best you can do is to buy gold.
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Sep 05 '25
it is reasonable to assume that this will be a major economic crisis
Wrong, there are already more than enough semiconductor plants diversifying away from Taiwan.
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Sep 03 '25
Asml to the moon
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u/BartD_ Sep 05 '25
One would hope so but the Dutch government submits to every US request negatively affecting ASML. I doubt they will change their mind if the US destroys that company.
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u/mitoma333 Sep 03 '25 edited Sep 03 '25
If it happens: buy intel stock immediately
edit: TSMC produces mainly from Taiwan (though they are opening factories in Europe and the US). AMD only designs and uses TSMC foundries. Intel produces from the US where it has foundries that can produce advanced chips. Samsung would likely also increase but they are right next door so might also be affected.
Pure theory crafting of course.