Contents

Taiwan storybook 5
Thinking beyond tourism 8
Beyond tourism 8
Policy developments 8
Evidence of stronger relations 9
ECFA and FMOU still on, despite cabinet reshuffle 10
Our strategy stays intact 11
Changes to sector calls 11
Tweaking our Best ideas 11
Earnings 12
A strong Q2 12
2009e earnings growth 13% 12
Upward earnings revision sprouts out of recovery 12
Valuations 14
PB lower than MSCI Asia ex-Japan; sector selection is key14
On ROE, telecom stands out 14
Valuation 16
Fund flows 17
Money supply rose in July on repatriating funds 17
Fund flows 19
Taiwan datapack 21
MSCI Taiwan price level 22
MSCI Taiwan price-to-book multiples 24
MSCI Taiwan dividend yields 26
PB vs ROE 28
Disclosure appendix 36
Disclaimer 39