Taiwan Authorizes Stabilization Fund Use After Index Falls 4.51% to 39,701.64 Points

Key Facts

Taiwan’s National Financial Stabilization Fund Management Committee authorized its executive secretary to use the fund’s money when needed to calm market volatility and support investor confidence, after the TAIEX closed at 39,701.64 points on November 6. The index lost 1,873.08 points, or 4.51%, and ended the session below 40,000 points. The decision followed a sharp weekly decline, giving the committee a tool to intervene when needed. The committee said the authorization allows the use of funds “to smooth market volatility.” The announcement did not specify the size of any actual purchases, while the Ministry of Finance said activation of the fund could begin the following week. If activated, it would be the fund’s tenth intervention in the market.

The TAIEX’s decline over the week from November 2 to 6 reached 12.19%, while the Philadelphia Semiconductor Index fell 15.7% over the same period, according to the committee. From its intraday peak of 49,968.92 points on October 6, the index lost about 10,267 points, or 20.55%, through November 6. The committee said Taiwan’s economic fundamentals are sound and its technology sector is strong. But it pointed to the high correlation between the local stock market and the U.S. semiconductor index. That puts the performance of Taiwanese stocks in the context of the pressure on chip shares during the week. Analysts said the sell-off was linked to concerns about potential restrictions on the development of AI data centers after Democrats won control of both chambers of the U.S. Congress.

The decline coincided with record net foreign sales of Taiwanese stocks, totaling 994.32 billion Taiwan dollars in October, the highest monthly level on record. Net selling totaled an additional 524.4 billion Taiwan dollars from the start of November through November 6. These figures provide context for foreign institutional investor flows during the downturn. Trading volume in the November 6 session was also about 1.246104 trillion Taiwan dollars, according to Taiwan’s Financial Supervisory Commission. Taiwan recorded a 4.51% decline in the session, compared with a 6.12% drop in Japan, 4.85% in South Korea and 2.73% in Singapore, according to the agency’s data for the same period.

The index fell 3,737.67 points during the session, its largest intraday point loss on record, before paring the decline by the close. The pressure extended to Taiwan Semiconductor Manufacturing Co. shares, which fell as much as 9.8% during trading. The stock then closed down 4.69% at 2,135 Taiwan dollars. The stock’s move coincided with the index’s losses, while no documented figure for the stock’s contribution to the TAIEX decline is available in the published facts here. Premier Cho Jung-tai said he had instructed the Financial Supervisory Commission to closely monitor international and domestic market developments. He added that it should remain flexible in determining ways to stabilize the domestic market.

The stabilization fund has 500 billion Taiwan dollars, equivalent to 15.26 billion U.S. dollars, and was established in 2000. Its previous intervention ran from April 9, 2025, to January 12, 2026, following U.S. President Donald Trump’s administration’s announcement of reciprocal tariffs. The current authorization comes after that period and would mark the fund’s tenth intervention since its establishment if activated. In a parallel move, the Financial Supervisory Commission encouraged listed companies to consider share buybacks. The commission also announced other stabilization measures that take effect on November 9. They include lowering the intraday short-sale order limit to 3% of a stock’s average daily trading volume over 30 sessions and raising the minimum collateral requirement for short sales from 90% to 130%.