SINGAPORE, Jan 11 Reuters Investors are bracing for a volatile reception to Taiwan39;s election on Jan. 13, with added focus on the island39;s chip sector, after China said the poll was a choice between peace and war.

In an electionpacked 2024, Taiwan will be the first major economy to vote as it holds presidential and parliamentary elections on Saturday, pitting the three main parties, the ruling Democratic Progressive Party DPP, the Kuomintang KMT and the Taiwan People39;s Party TPP, against each other.

Both the TPP and KMT have pledged to restart dialogue with China if they win the presidency. China claims Taiwan as its own territory despite strident objections from Taipei and has never renounced the use of force to bring it under Beijing39;s control.

The election comes under the dark clouds of escalating tensions with China, keeping investors jittery, with Taiwan also the main flashpoint in U.S.China tensions.

Despite these jitters, Taiwan39;s stock market soared last year, gaining 27 last year, its strongest yearly performance since 2009, and foreign investors pouring in 3.45 billions in Taiwan equities.

Here are some scenarios and how markets are likely to react

RULING DPP WINS PRESIDENCY, LOSES PARLIAMENT MAJORITY

A DPP victory is likely to lead to what some investors say will be a shortterm selloff in Taiwan stocks and Taiwan dollar , with a riskoff environment weighing on chip and tech stocks.

Taiwan is a major manufacturer of chips used in everything…