Rapid Changes in Public Opinions

 * In an election year, opinion polls are the most readily available indicator of how the campaign is going for each of the candidates. For Taiwan's presidential race in January 2024, there have been subtle changes that may evidence a dominant two-party system in Taiwan is under closer scrutiny and a changing political landscape is coming.

* According to the latest poll numbers, the ruling DPP has dropped over 6% in party approval and support ratings, while the KMT suffered another 5% decline from last month. Worse yet for the KMT, the former Taipei Mayor Ke Wen Je-led Taiwan People's Party (TPP) has overtaken the KMT and captured the second place behind the ruling DPP in the same category.

* Though most believe the TPP has the momentum and the support, especially among voters 40 and under, to make a significant impact in the campaign, most didn't expect that upward thrust would come so strongly, and push the KMT to the third place so quickly. If this pattern holds, Ke, as TPP's presidential nominee, is in position to fortify his candidacy and elevate the relevance of TPP in Taiwan's democracy.

* While the election is still seven months away, the KMT is cautioned not to be perceived, or always stay, in third-place from here on out. If that perception sticks, it's very difficult, if not impossible, for the KMT to be considered seriously in future islandwide campaigns. Its presidential nominee, New Taipei City Mayor Hou You-yi, is currently embroiled in a kindergarten controversy with alleged misuse of medicine. More importantly, the inability to repair divisions from its primary has long remained the party's Achilles' Heel that would further undermine its political stature and influence domestically.

 Dialogue, Dialogue, and More Dialogue

* Director of the American Institute in Taiwan (AIT), Sandra Oudkirk, made a statement that could signal a subtle policy shift in the U.S. management of cross-Strait relations.

* Ms. Oudkirk declared that, "Dialogue is good. Dialogue is useful," on Friday, June 9, in Taipei. At a time when Washington is seeking dialogue with China, the U.S. encourages the three Taiwan's presidential candidates--DPP's William Lai, KMT's Hou You-yi, and TPP's Ke Wen-je--to do the same.

* Although the U.S. has always welcomed cross-Strait dialogue between the two feuding neighbors, this time could mark the beginning of a more conciliatory approach toward China that the U.S. would like to see taking place before things get out of control, in and around the Taiwan Strait. The biggest threat has always been the risks of miscalculation, or misinterpretation, since cross-Strait dialogue has been shut down completely since 2016 when Tsai Ing-wen became president.

* Since Beijing has preconditioned the acceptance of the 1992 consensus before resumption of dialogue, it seems highly unlikely, if not impossible, that the Tsai administration would make any overture before the January 2024 presidential election.

* Among the three candidates, Lai once prided himself as a "pragmatic pro-independence advocate" is the least likely among the three to propose any concrete steps to resume dialogue. While Hou may be in a better position to make dialogue a reality after taking over the presidency, he has been elusive and reluctant to express his view toward the 1992 consensus, or his policy approach toward China. As for Ke, he does not appear to be a man of deep, personal convictions, especially on sensitive issues like cross-Strait relations. He would, however, periodically throw out ideas deemed appealing to the segment of the electorate, or the international audience, at that time. So, it seems too early to call if the resumption of cross-Strait dialogue appears imminent.

 Risk of Marginalization

* According to the latest opinion polls, KMT presidential nominee Hou You-yi  has fallen further behind to third place, behind DPP's William Lai and TPP's Je Wen-je. This has put many rank-and-file members on the edge and are calling for replacing Hou, possibly with Foxconn founder Terry Gou. Though that possibility is remote at best, Hou has done very little, if anything, to repair intra-party cleavage and division since his nomination on May 17.

* In fact, Hou has spent the bulk of his time visiting retired, aging KMT politicians, "seeking wisdom" and accumulate support. This is a VERY, VERY old-fashioned campaign style once championed by the KMT in the 1990s. But most of the electorate does not know, or remember, these older generations of KMT leaders, especially for those 40 and under. In addition, Hou has avoided answering key questions on cross-Strait relations with China and Taiwan's nuclear energy. He might have been able to dodge those questions when he wasn't the nominee, but now as the nominee, his reluctance to respond has been largely interpreted as an indication that he is not ready to lead. That does not bode well for Hou and the KMT.  

* To be frank, Hou has never been a charismatic political leader. As a former policeman, his low-key, no-nonsense approach might have been great in crime-fighting, but that style is clearly outdated in Taiwan's animated domestic politics today. Moreover, he is especially behind the other two contenders among those under 40 and those with higher educational background. Sadly he has done little to broaden ties and deepen understanding with those voting blocks.

* Making the matter worse, Hou has not consolidated his campaign team with those at the KMT HQ. His lack of progress at integrating the two is, at least partially, a reflection of his plans to remain somewhat apart, on some policies, from the KMT. The intent might have been to try and capture those considered "middle-of-the-road," but the result so far has been the inability to solidify support first among the KMT grassroots. Though there's still time to turn things around, there's no indication that Hou's rebound in poll standing is either immediate or imminent. Stranger things have happened under similar circumstances in the past.

   

Will He...or Won't He? 

* Though the presidential nomination was made official in mid-May, the Kuomintang (KMT) is apprehensive over what former Foxconn Chairman Terry Gou plans to do next.

* There are more than one option available for Gou. The worst-case scenario would be for Gou to team up with former Taipei Mayor Ke Wen-je, the current chairman of the Taiwan People's Party (TPP), on the same ticket. According to most opinion surveys, a Gou-Ke ticket would be the one to beat in the 2024 presidential election.

* Gou is taking a temporary hiatus from the public eye. He has not commented publicly about the KMT primary, and he has declined to answer calls from those concerned with his next step. The expectation is for Gou to stay behind the scenes until he is ready to re-insert himself into the political realm.

* On the other hand, the KMT nominee, Hou You-yi, has not made any progress in opinion polls since the official nomination on May 17. In addition, he has been elusive on sensitive issues like cross-Strait policy toward China. He doesn't seem prepared to accept the "1992 consensus," which is at the core of KMT's China policy. That is one of many policy differences that he has to reconcile with the KMT HQ and its think tank in the coming weeks.

 Nvidia's Victory Lap

* Nvidia's founder and CEO Jensen Huang has been the shining star in Taiwan the last few days. As a global Taiwanese American corporate leader in chip technology, Huang captured media attention from his unannounced visit to the night market to the commencement speech at the National Taiwan University on May 27. He was undoubtedly the focal point following the rapid rise in Nvidia stock price to the widespread hype over artificial intelligence (AI).

* Huang is expected to deliver the keynote speech on May 29 to a houseful attendees from around the world at the 2023 Computex Taipei. His views on the future of AI, and the norms of its applications, are believed to have an impact on the market beyond the TaiEx.

* Riding on the AI fever, a number of local stocks are expected to outperform the index, including TSMC (2330), Pegatron (4938), Unimicron (3037), Aspeed (5274), Sunonwealth (2421), and eMemory (3529). Following the tentative deal between the White House and the House of Representatives on the debt ceiling limits, many expect the TaiEx to break north of 17,000 points this week.