Taiwan authorizes use of stabilization fund after index falls 4.51% and closes below 40,000 points

Key Facts

Taiwan’s National Financial Stabilization Fund Management Committee authorized its executive secretary to use the fund’s money as needed to ease market volatility and support investor confidence, after the TAIEX closed on November 6 down 1,873.08 points, or 4.51%, at 39,701.64 points. The close was below the 40,000-point level, following a session marked by sharp swings in share prices. The decision gives the committee authority to use the funds, while the existing fund has a total value of $15.26 billion. The committee said the authorization allows it to intervene to smooth market volatility. This was the fund’s tenth intervention since its establishment.

The index moved between 37,837.05 points and 40,435.83 points during the session before ending trading at 39,701.64 points. Trading value reached T$1.25 trillion, equivalent to $37.70 billion, indicating broad activity on a day of heavy selling. The distance between the session low and the close shows that the index recovered some of its losses before the end of trading, but remained below the 40,000-point threshold. The close was below the session high. The session’s price action reflected strong volatility in Taiwan’s stock market.

TSMC shares helped move the index: they recovered from an early decline of 10%, the maximum daily limit allowed, to close down 4.69% at T$2,135. Focus Taiwan said the share’s recovery trimmed TAIEX losses by about 920 points. The closing price differed from the low reached during the session, after the stock rebounded from its daily downside limit. The shares remained lower at the close, but their recovery limited the index’s decline. The move highlights the influence of large-cap stocks on the market’s daily performance.

Over the week ended November 6, the TAIEX lost about 12.19%, compared with a 15.7% decline in the Philadelphia Semiconductor Index, according to the committee. A Reuters report said the Taiwanese index’s weekly decline was 12.2%, its biggest since 1991, based on LSEG data. The index also fell by more than 8% at one point during the November 6 session before trimming its losses, Reuters reported. The weekly comparison places Taiwan’s performance within broader pressure on semiconductor stocks. The committee cited losses in the U.S. chip index when presenting the market’s performance for the week.

The pressure coincided with heavy selling by foreign institutional investors, who recorded net sales of T$994.32 billion in Taiwanese shares in October, the highest monthly net sales on record. Their net sales totaled T$524.4 billion from the start of November through the committee’s announcement. The October data provide context for the broadening pressure on the market, while November’s sales indicate that selling continued in the days before the authorization was announced. This coincided with concerns that the United States could impose potential restrictions on the development of AI data centers, after Democrats won control of both chambers of Congress, according to market analyses cited by Focus Taiwan. Those analyses linked the wave of selling in Taiwan and the United States to those concerns.

The fund is worth T$500 billion, equivalent to $15.26 billion, and was established in 2000 as a reserve to address external shocks. The current authorization is its tenth intervention since its establishment. The previous intervention ran from April 9, 2025, to January 12, 2026, following the Trump administration’s announcement of reciprocal tariffs. The record of past interventions is relevant as the committee is now authorized to use the funds as needed to calm the market. The Financial Supervisory Commission also announced that it would encourage listed companies to buy back their shares, reduce the amount of stock lending for short selling, and raise stock-borrowing collateral requirements to stabilize the market.

Investors’ shift toward safe havens extended to bond and currency markets: Reuters reported gains in government bond markets and safe-haven inflows into the dollar, yen and Swiss franc. The yield on the U.S. 10-year Treasury note reached 4.84% in Europe, near its lowest level since September 9, according to the report. In contrast, Nasdaq futures rose about 1.5% and the VIX edged lower, two signals Reuters cited as pointing to possible relief for U.S. markets later on November 6. An investment fund manager told Reuters that the coming days would be a major test of market sentiment and confidence in the AI sector. The next development for Taiwan’s market will be the impact of the authorization and regulatory measures on trading.