President Lai Ching-te used a televised interview that aired Friday night to restate one of his administration’s more ambitious economic goals: turning Taiwan’s capital market into the Asian equivalent of the Nasdaq, a place where startups from anywhere in the world come to raise money and plug into the island’s hardware supply chain. He argued Taiwan is better positioned to win that race than South Korea, Japan, Singapore, China or Hong Kong, pointing to the local market’s status as the world’s fifth largest by value, its deep liquidity, and what he called the most comprehensive AI ecosystem on the planet.

Financial markets have been incorporating Taiwan Strait risk into asset prices with increasing explicitness over the past several years. The process is imprecise — markets price many risks simultaneously and isolating the Taiwan variable from the broader China risk premium, the global technology sector risk, and the general geopolitical uncertainty that has elevated risk premiums across multiple asset classes is methodologically challenging. What is clear is that investors who price Taiwanese assets, technology sector equities, and securities with significant Taiwan supply chain exposure are applying a discount that was not present a decade ago and that has grown as the military and political indicators have deteriorated.

The global economic cost of a Taiwan Strait military conflict has been modeled by institutions ranging from the Rhodium Group to Bloomberg Economics to various government think tanks and war gaming centers. The estimates vary widely because the scenarios they model vary widely — a short, limited conflict produces different numbers than a prolonged blockade, which produces different numbers than a full-scale invasion with global power intervention. What the models agree on is that the numbers are very large, larger than any economic disruption since the Second World War, and large enough that they constitute an argument for prevention that is separate from any moral or political case for Taiwan’s defense.