Taiwan's Finance Minister Mulls Boost to Market Stabilization Fund Amid Global Economic Headwinds

Chuang Tsui-yun Considers Expanding Fund to Shield Local Stock Market from External Shocks

Taipei, Taiwan – Finance Minister Chuang Tsui-yun (莊翠雲) has signaled openness to expanding the NT$500 billion (US$15.37 billion) National Financial Stabilization Fund, aiming to better protect the local stock market from the impact of negative external factors. The announcement was made Wednesday, reflecting the government's proactive stance on maintaining market stability.

Speaking before the Legislative Yuan's Finance Committee, Chuang indicated that the Ministry of Finance (MOF) is considering expanding the fund due to the significant increase in market capitalization over the past decade. The MOF had previously studied the possibility of increasing the fund's size.

The move comes as lawmaker Kuo Kuo-wen (郭國文) plans to initiate an amendment to the Statute for the Establishment and Administration of the National Financial Stabilization Fund. This proposed amendment seeks to raise the fund's capacity to NT$1 trillion.

The current financial stabilization fund sources funding through two main avenues. One involves borrowing from financial institutions, backed by the National Treasury's stock holdings in both public and private enterprises, with a ceiling of NT$200 billion. The other permits borrowing from various sources, including the postal deposit system and several pension funds, up to a limit of NT$300 billion.

Kuo is proposing the removal of these borrowing ceilings to grant the fund greater flexibility in responding to market volatility. The fund was originally established in 2000 to safeguard against external factors that could disrupt the local bourse.

According to Kuo, the market's value has surged to over NT$70 trillion today, compared to NT$8 trillion in 2000. The fund has been activated multiple times, including the ninth intervention since its inception, in response to the Trump administration's tariff threats.

Following the imposition of a 32 percent tariff on Taiwanese goods on April 2, the Taiex fell by 1,440.55 points, or 6.76 percent, to 19,857.67 by Tuesday. However, the index has since partially recovered. The market saw a pause when the new measures were paused for 90 days and duties applied at 10 percent on all countries but China.

Chuang noted that the fund has never utilized the second borrowing source. She also emphasized that the fund's executive secretary, currently Vice Finance Minister Juan Ching-hua (阮清華), manages the fund cautiously to support the market and boost investor confidence.

Chuang also acknowledged the decrease in turnover in the local stock market, with many investors adopting a cautious stance due to tariff concerns affecting global economic conditions. The MOF reported that the average combined turnover on the main board and over-the-counter market fell to NT$400.4 billion in March, representing a 27.4 percent decrease year-over-year. This resulted in a 24.6 percent drop in stock transaction tax revenue to NT$21.9 billion in March, the largest decline in 26 months.