Taiwan's Stock Market Braces for Global Volatility: Short Selling Curbs Extended

FSC Takes Action to Safeguard Investors Amid Uncertainties

Taipei, April 19 – The Financial Supervisory Commission (FSC) of Taiwan has announced the continuation of measures to curb short selling in the local stock market, citing ongoing uncertainties stemming from the United States' fluctuating tariff policies.

These measures were initially implemented during the week of April 7, following the announcement of sweeping "reciprocal" tariffs by U.S. President Donald Trump, which surprisingly included a 32 percent import duty on Taiwan.

While initially extended for one week, the FSC has opted to not specify the duration of the current extension in its recent statement.

The implemented measures include a reduction in the intraday sell order limit for borrowed securities, lowering it from 30 percent of the stock's average trading volume over the previous 30 trading sessions to just 3 percent.

Furthermore, the minimum margin ratio for short selling on the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEx) has been increased from 90 percent to 130 percent, according to the FSC.

The FSC has also eased restrictions on the types of collateral that can be used to cover margin deficits, aimed at reducing the financial burden on investors amidst market volatility.

In the past week, the Taiex, the Taiwan Stock Exchange's main index, experienced a slight decrease of 0.68 percent, following a significant drop of 8.31 percent the previous week.

This improved performance coincided with Trump's announcement to pause the new measures on April 9, with a 10 percent duty now slated to apply to all countries except China.

The FSC, as the top financial regulator in Taiwan, acknowledges that while the market shows signs of stabilization, the Trump administration's tariff threats and ongoing negotiations with trading partners still present challenges to global financial markets.

To protect investor interests and in anticipation of potential global volatility, the FSC has decided to maintain these protective measures.

The FSC emphasized the sound fundamentals of the local market, highlighting that combined revenue of companies listed on the main and OTC markets in the first quarter of 2025 increased by 17.32 percent year-on-year to NT$11.22 trillion (US$344 billion).

Despite the rising revenues, local stocks are currently trading at relatively low valuations, with a price-to-earnings ratio of 17.28, suggesting a potentially attractive investment environment, the FSC stated.

The commission also pointed to the growing number of listed companies announcing share buyback programs as a sign of their commitment to supporting share prices.

As of April 18, a total of 125 listed companies had launched repurchase plans, up from 82 on April 11, according to the FSC.

In addition to the FSC's measures, the NT$500 billion National Financial Stabilization Fund, established in 2000 by the government to buffer against external disruptions, has been intervening in the market since April 9.