Taiwan exports have literally exploded over the past couple of quarters. Monthly exports have now doubled in dollar terms since the beginning of 2024, blowing way past anyone else in EM, and are still increasing at a dizzying pace.

And it's all about AI data servers. Historically we think about Taiwan and semiconductors, and the "2024 story" was more about mainland-produced goods being transshipped through the island, inflating both the import and export numbers - but the story of the last 6-9 months is the massive surge in local production of computer equipment, predominantly AI data servers headed for the US market.

This is pushing Taiwan output to new heights - and surpluses to insane levels as well. Taiwan's domestic demand trends are still as bad as ever, but factory output is surging. And the merchandise trade balance has already skyrocketed by more than 10pp of GDP.

And suddenly we're looking at very unpredictable implications for macro policy. In particular, we've been downplaying the prospects for significant exchange rate adjustment to date ... but with these kinds of numbers, who knows? Things could get really interesting. And we'll take some TWD and equity exposure as a result.