Taipei: Taiwan's Ministry of Finance (MOF) announced on Monday that the National Financial Stabilization Fund may convene a special meeting to address market volatility, following the impact of the United States' recent tariff impositions on global financial markets. The stabilization fund is closely monitoring global market conditions and may hold a meeting prior to its regular schedule on April 14 to bolster investor confidence and stabilize the local capital market.
According to Focus Taiwan, the NT$500 billion (US$15.15 billion) stabilization fund, established in 2000, serves as a buffer against unforeseen external factors that could disrupt Taiwan's stock market. The MOF's comments came after the Taiex, Taiwan's benchmark weighted index, saw a record single-day decline of 2,065.87 points, or 9.7 percent, on Monday. This plunge brought the index to 19,232.35, influenced by U.S. President Donald Trump's newly announced tariffs.
Trump's announcement on April 2 introduced a 10 percent baseline tax on imports from most countries, excluding Russia, North Korea, Cuba, and Belarus, effective April 5. Nations with significant trade surpluses with the U.S., including Taiwan (32 percent), China (34 percent), and others, will face increased tariffs starting April 9.
Market analysts noted that Monday's turnover hit a two-year low of NT$147.295 billion, as investors hesitated to buy amid the downturn, anticipating further losses. The MOF highlighted that the recent turbulence mirrored global market volatility during the April 3-4 Tomb Sweeping Festival holiday, citing sharp declines in major U.S. indices.
The MOF emphasized Taiwan's market correlation with the U.S. and noted existing governmental measures to counteract market fluctuations. The Financial Supervisory Commission's short-selling restrictions were implemented before Monday's trading and will continue through Friday, aiming to stabilize the market.
Additionally, the Cabinet has allocated NT$88 billion to support Taiwanese industries, particularly electronics and steel, affected by the tariffs. President Lai Ching-te announced plans for tariff negotiations with the U.S., inspired by the USMCA, and a commitment to increase investments in the U.S. market.
The stabilization fund expressed confidence that current market volatility would be temporary, urging investors to remain rational and noting Taiwan's sound economic fundamentals. In its last intervention between July 2022 and April 2023, the fund invested NT$54.51 billion to mitigate volatility from U.S. Federal Reserve rate hikes, contributing to a 10 percent rise in the Taiex during that period.