Nancy Pelosi, the Speaker of the US House, has been to and from Taiwan. In its wake were missile overflights, enough talk to briefly crush China Twitter– like the Weibo microblogging service, the largest Chinese military exercises near the Taiwan Strait in decades – and for those on the island, a surreal sense of life is mostly unfolding.
The markets reacted strongly but not catastrophically. US 10-year Treasury yields fell to a four-month low before Ms Pelosi arrived as investors fled for safety, then rebounded after her plane landed without incident. Taiwan’s main stock index, after a steep drop on Tuesday, has since recovered all that ground. Shares of International Semiconductor Manufacturing Company China’s national chipmaker, who also fell ahead of the visit, has gained 15% since her plane landed and China announced its military drills. The S&P Defense and Aerospace Select Index has risen 9% since July 18, when news of Ms Pelosi’s planned trip was first reported, outpacing the S&P 500’s 8% gain.