Taiwan moved to steady its battered stock market on Monday, imposing curbs on short selling and authorising its NT$500 billion ($15 billion) stock stabilisation fund after the benchmark Taiex suffered its worst week since 2001.
The island’s Financial Supervisory Commission said that from Monday, intraday orders to sell borrowed shares would be capped at 3% of a stock’s average daily trading volume over the previous 30 sessions, down from 30%. The minimum margin requirement for short sales rises to 130% from 90%, making bets against the market more expensive.
Alongside the trading curbs, the Finance Ministry said it was prepared to deploy the National Financial Stabilization Fund, authorising up to NT$500 billion in its tenth market intervention since 2000. The authorisation sets a ceiling for support rather than a commitment to spend the full amount.
The intervention follows a brutal week for Taiwanese shares. The Taiex plunged as much as 9% during trading on Friday, its largest intraday point drop on record at roughly 3,700 points, before closing 4.51% lower at 39,701.64. Over the week the index lost 12.19%, or 5,510 points, wiping about NT$18 trillion ($549 billion) from the market’s value and pushing the benchmark into a bear market, more than 20% below its October peak.
Taiwan Semiconductor Manufacturing Co, which accounts for more than 40% of the Taiex’s market value, led the slide, falling almost 10% at Friday’s open before closing 4.7% lower. Foreign investors have sold about $20 billion of Taiwanese shares across seven sessions, according to Goldman Sachs data cited in market reports.
The sell-off was part of a broader rout in artificial intelligence shares that followed the US midterm elections, with South Korea’s Kospi crashing as much as 8.8% on Friday, tripping a market-wide halt, and Japan’s Nikkei falling 6% into a bear market.
Taipei’s measures take effect as trading resumes on Monday, and there were early signs the intervention could steady nerves: the Philadelphia Semiconductor Index rebounded more than 4% on Friday and TSMC’s US-listed shares surged over 6%. But analysts cautioned that trading curbs and a stabilisation fund can only cushion selling, not resolve the underlying doubts about AI demand and the returns on trillions of dollars of investment in data centres and chips.
Sources: Bloomberg, reported by Seeking Alpha (https://seekingalpha.com/news/4668145-taiwan-sets-new-short-selling-limits-to-aid-beaten-stock-market); Taipei Times, reported by Traders Union (https://tradersunion.com/news/stocks/show/4150528-taiwan-short-selling-restrictions/); TokenPost (https://www.tokenpost.com/news/investing/51333).
