Taiwan's government has approved deploying its NT$500 billion National Stabilization Fund (NSF) in response to a stock rout. The Taipei Times reports the TAIEX fell more than 3,700 points intraday, the largest such drop on record.
According to the Taipei Times and the Liberty Times, the Executive Yuan authorized the fund's steering committee, which oversees NT$500 billion, to intervene in the market if needed. If it acts next week, it would be the 10th intervention since the fund was set up. The United Daily News said the authorization followed a briefing for President Lai Ching-te by financial agencies.
광고 문의 · 300×250The market shock was large. The Taipei Times said the TAIEX dropped 3,737.67 points early, the biggest intraday fall on record, then recovered part of it to close down 1,873.08 points at 39,701.64. It lost 12.19 percent over the week and sits more than 20 percent below its October 6 high, in bear-market territory. Worries about slowing AI data-center investment were cited.
Short-selling limits and buyback encouragement
The Financial Supervisory Commission said temporary measures take effect Monday. Intraday securities lending for short selling is cut from 30 percent to 3 percent of a stock's average volume over the prior 30 sessions, the deposit required to borrow shares rises from 90 percent to 130 percent of value, and listed firms are encouraged to buy back shares.
Premier Cho Jung-tai told financial regulators to monitor the market closely. The Ministry of Finance said Taiwan's fundamentals are sound but that the heavy weight of tech stocks makes the market move closely with the Philadelphia Semiconductor Index. The TAIEX's weekly fall was second only to that index's 15.7 percent drop.
Foreign selling is the wild card
Foreign institutions net sold a record of about NT$994.3 billion of Taiwan shares last month and a further NT$524.4 billion this month through the previous day. Some in the market argue the fund alone cannot reverse the trend while that selling continues, but its effect depends on the size and timing of actual deployment, which are not yet known.
The fund was also used during the April 2025 plunge. For Korean investors, swings in a Taiwan market that shares the chip cycle may spill into Korea, so attention is warranted. This paper will report when the fund's entry and scale are made public.
