Taiwan elections in three weeks

The U.S. is focused on the Iowa caucus and New Hampshire primary, but a more important vote will take place on January 14 when Taiwan goes to the polls. Polling data has the KMT candidate for president, Ma Ying-jeou leading the DPP candidate, Tsai Ing-wen, by 6%. However, Taiwan's prediction market has the DPP candidate leading Ma by a similar amount. The first chart is the predicted vote totals, with Ma rising into the final weeks. The second is the probability of a win, like Intrade this is the price of the contract. Right now traders are buying Tsai Ing-wen contracts for 65.90 versus 31.70 for Ma Ying-jeou contracts. The payout is 100 or 0.

One problem with these numbers may be that the site gives out free chips to start. I signed up and filled out my personal info, so I have NT$60,000, or about $2,000 to play with. That makes me suspect the value of these numbers as compared to Intrade, where it is all real money. That said, the market is certainly inline with a socionomic forecast. I'll have to do a little research to see if the current prices make sense. My gut says the KMT candidate looks undervalued, assuming the polling data has some value. Investing isn't just about predicting the right outcome, but also buying or selling at the right price......

The site for the market is XFutures

Here's the link to the blog entry with the charts: 未來事件交易所目前對2012年總統選舉預測 蔡英文得票率50.4%、領先馬英九6.2個百分點_20111227

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