Taiwan's Financial Stabilization Fund Eyes Emergency Meeting Amid Global Market Turmoil

Government Measures Aim to Calm Investors as US Tariffs and Market Downturns Impact Taiwan's Economy

Taipei, April 7 - Taiwan's Ministry of Finance (MOF) announced that the National Financial Stabilization Fund is considering a special meeting to address market volatility triggered by the latest round of U.S. tariffs, rattling global financial markets.

In a statement, the MOF indicated that the stabilization fund is closely monitoring global market conditions and may convene a special meeting beyond the regular April 14 meeting. This move aims to bolster investor confidence and stabilize Taiwan's capital market.

The NT$500 billion (US$15.15 billion) stabilization fund was established in 2000 to protect against external factors that could disrupt the local bourse.

The MOF's comments followed a significant downturn in the Taiex, the benchmark weighted index on the Taiwan Stock Exchange, which plummeted 2,065.87 points, or 9.7 percent, to 19,232.35 on Monday. This decline was fueled by concerns over U.S. President Donald Trump's new tariff actions.

Monday's losses marked the steepest single-day drop in history, surpassing the previous record of 1,807.21 seen on August 5, 2024.

Taiwan shares plummet 9.7%

On April 2, Trump announced a 10 percent baseline tax on imports from most countries, with the exception of Russia, North Korea, Cuba and Belarus, starting April 5.

Countries with larger trade surpluses with the U.S. will face higher tariffs starting April 9, including Taiwan (32 percent), China (34 percent), Japan (24 percent), South Korea (26 percent), Vietnam (46 percent) and Thailand (37 percent).

Market analysts noted that Monday's turnover hit a two-year low of NT$147.295 billion, with many investors hesitant to buy the dip, anticipating further losses.

The MOF stated that the recent turbulence in Taiwan's market reflected the volatility in global markets during the Tomb Sweeping Festival holiday period of April 3-4. This included a 9.26 percent decline in the Dow Jones Industrial Average, a 10.53 percent drop in the S&P 500, and an 11.44 percent fall in the tech-heavy Nasdaq index over those two sessions.

The MOF highlighted the close correlation between the Taiwan market and its U.S. counterparts, explaining the expected volatility.

The government is prepared to address these market fluctuations. The MOF added that the Financial Supervisory Commission implemented measures to curb short selling before trading on Monday, which will remain in effect through Friday, though the intervention had little impact on Monday.

Additionally, the Cabinet has allocated NT$88 billion to support Taiwanese businesses, including the electronics and steel industries, expected to be significantly impacted by the tariffs.

Furthermore, the MOF mentioned that President Lai Ching-te (賴清德) has stated that Taiwan will seek negotiations with the U.S., targeting "zero tariffs" based on the United States-Mexico-Canada Agreement (USMCA), while also vowing to increase its investments in the U.S. market.

In its statement, the stabilization fund expressed confidence that market volatility would be temporary, with market attention eventually returning to Taiwan's strong fundamentals. Investors are advised to act rationally.

The stabilization fund last intervened in the market from July 13, 2022, to April 13, 2023, investing approximately NT$54.51 billion to counter volatility caused by the U.S. Federal Reserve's aggressive rate hikes. During that period, the Taiex increased by over 10 percent.