Taiwan Cuts Short-Selling Limit to 3% Amid Sharp Stock-Market Slump
Key Facts
Taiwan tightened short-selling rules effective November 9, cutting the daily limit on orders executed using borrowed securities to 3% of a stock’s average daily trading volume over the previous 30 days, from 30%, according to Bloomberg coverage via Moneycontrol. The decision came on November 6, a day of sharp declines in the Taiwanese market and pressure on Taiwan Semiconductor Manufacturing Co.’s shares. At the same time, the finance ministry said it was ready to deploy the NT$500 billion stock market stabilisation fund if needed. The executive yuan was also authorised to use the funds, depending on circumstances, to carry out the market stabilisation mandate. The Financial Supervisory Commission said the measures were aimed at maintaining order and stability in local stocks amid heightened volatility.
The measures also raised the minimum margin requirement for short selling to 130% from 90% effective November 9, according to the same coverage. The change means the order cap is calculated against each stock’s average trading volume over the previous 30 days, rather than as a fixed share of trading during the session. The announcement coincided with the Taiex falling as much as 9% on Friday and entering bear-market territory, before trimming some losses ahead of the close. Reuters said the Taiwanese benchmark was down more than 8% at one point in trading, then pared losses as authorities moved to curb selling. The finance ministry said the index had shed a cumulative 5,510 points between November 2 and 6, closing at 39,701 points on November 6.
TSMC was among the biggest sources of pressure on the local market. Taiwan’s Central News Agency said the stock hit its daily decline limit at NT$2,020 on November 6, after the Taiex fell 3,737.67 points in the first minutes of trading. The agency added that the stock fell NT$220, its largest intraday drop in absolute terms, cutting the company’s market value by NT$5.7 trillion. Reuters said the stock fell as much as 8.5% before closing down 4.7%, while Taiwanese shares ended 4.5% lower. The ministry said the Taiex lost 12.19% over the trading week ended November 6. It also recorded its biggest weekly loss since 2001, according to coverage published that day.
In the United States, the stock rebounded before the market opened on Friday, in contrast with its decline in Taiwan during the same session. Benzinga said shares rose about 7% in premarket trading and reported a 6.77% gain to $377.00, according to Benzinga Pro data. That move was limited to trading before the US open, while EL7 data showed the stock closed at $353.10 on November 5. The rebound followed a selloff in semiconductor stocks globally; Bloomberg said TSMC led declines in Taiwan alongside a broader drop across the sector. The stock’s performance in the two markets thus followed different paths on a day marked by wide swings.
Taiwan’s finance ministry linked the pressure to simultaneous declines in US and Asian stocks after the US midterm elections, and to the local market’s technology-heavy composition and its connection to moves in the Philadelphia Semiconductor Index. The ministry said net foreign selling reached NT$994.316 billion in October, a monthly record, and continued through November 6, with net sales of NT$524.4 billion. The ministry said the continued selling reflected a significant deterioration in market confidence. Separately, Benzinga coverage linked the chip-stock turmoil to investor questions over whether a shift in the US political landscape after the midterm elections could slow the construction of AI data centres. A slowdown in infrastructure, the coverage said, could reduce demand for advanced processors used in AI servers and related systems.
The company’s latest quarterly results showed strong growth: TSMC reported revenue of $46.72 billion in the third quarter of 2026, up 41.2% year over year and 16.2% from the previous quarter. But those results came amid broader volatility in technology and chip stocks, while the finance ministry said the Taiex was down 20.55% from its annual peak of 49,968 points through the November 6 close. The authorities’ response included lowering the cap on borrowed-share sell orders and tightening margin requirements, alongside authorisation to activate the stabilisation fund if needed. TSMC is scheduled to report its monthly October sales on November 10, 2026, according to its investor-relations calendar. That date follows the release of September sales on October 8.