An Analysis of ROI of Taiwan¡¯s Stock Market: A Case Study in Light of the Chinese Tradition of Store in Winter

There is a Chinese saying that goes ¡°plough in spring, hoe in summer, harvest in autumn, and store in winter¡±, which reflects the traditional farming practice of Taiwanese in response to the change of seasons and the ancient annual work-rest pattern of Chinese farmers. This lifestyle of Chinese, however, might be different from that of foreigners. In light of this, this study is carried out based on ¡°Are there any regular variations in the Taiwan stock market: a case study of Taiwan stock exchange capitalization weighted stock Index (TAIEX)¡±, a study by Yang and Yang (2015), in order to determine whether this Chinese idea has rendered Taiwan¡¯s stock market any underlying characteristic which is different from other countries¡¯ stock markets in terms of investment activities. The results do reveal a regular variation pattern of Taiwan¡¯s stock market. In the study, the seasonal change of traditional Chinese farming work-rest schedule is investigated in conjunction with the seasonal variation of Taiwan¡¯s stock market. The results reveal that the ROI of Taiwan¡¯s stock market tends to be most significant in winter, i.e. there is a Winter Effect. The study also tries to determine whether this effect fits the January Effect in foreign countries. The results suggest the existence of a December Effect in ROI of Taiwan¡¯s stock market.