Taiwanese stocks rally as authorities introduce measures to curb market decline
The Taiex Index rose as much as 5 per cent on Monday following new short-selling restrictions and the potential use of a stabilisation fund.
Taiwanese shares rose on Monday after authorities introduced measures to restore investor confidence following a seven-session decline. According to Mint, the benchmark Taiex Index climbed as much as 5 per cent, marking its largest gain since July 31.
The rally occurred after Taiwan’s market regulator and finance ministry pledged to calm investors. The regulator announced it would limit intraday short-sale orders for borrowed securities to 3 per cent of a stock's average daily trading volume over the previous 30 days, down from 30 per cent.
The financial regulator also increased the minimum margin requirement for short-selling from 90 per cent to 130 per cent. Authorities also expressed readiness to use the NT$500 billion National Stabilization Fund (NSF) to support the market.
Taiwan Semiconductor Manufacturing Co. and MediaTek Inc. led the gains, with both stocks rising at least 5 per cent. The rebound followed a period where the technology-heavy market entered bear territory during a global AI stock rout.
A note from a Goldman Sachs Group Inc. sales and trading desk to institutional clients stated that while the NSF announcement boosts sentiment, actual capital used might be limited. The note mentioned that in 9 previous instances, between NT$0.76 billion and NT$122.7 billion were deployed from the NT$500 billion fund.
Goldman Sachs reported that previous NSF interventions prompted average market rallies of 6 per cent in the following week. However, the note added that in six out of those nine instances, markets saw further drawdowns of 5 per cent to 28 per cent within six months.