Stabilization fund could hold special meeting to ease volatility

Taipei, April 7 (CNA) Taiwan's Ministry of Finance (MOF) said Monday that the National Financial Stabilization Fund has not ruled out the possibility of convening a special meeting to discuss measures to assuage market volatility, as the United States' latest round of tariffs rattled the global financial markets.

In a statement, the MOF said the stabilization fund was watching closely market conditions worldwide and could hold a special meeting, beyond a regular meeting scheduled for April 14, in a bid to shore up investor confidence and stabilize the local capital market.

The NT$500 billion (US$15.15 billion) stabilization fund was set up in 2000 by the government to serve as a buffer against unexpected external factors that might disrupt the local bourse.

The MOF made the comments after the Taiex, the benchmark weighted index on the Taiwan Stock Exchange, plunged 2,065.87 points, or 9.7 percent, at 19,232.35 on Monday as market sentiment was dampened by U.S. President Donald Trump's fresh tariff actions.

Monday's losses were the steepest daily decline in history, smashing the previous record of 1,807.21 seen on Aug. 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 said Monday's turnover dipped to a new low of NT$147.295 billion in more than two years as many investors were reluctant to buy the dip, and that further losses will come.

The MOF said the latest turbulence on the local main board reflected the volatile global markets during the April 3-4, when the local market closed for the Tomb Sweeping Festival holiday, referring to a 9.26 percent decline on the Dow Jones Industrial Average, a 10.53 percent drop on the S&P 500, and a 11.44 percent fall on the tech-heavy Nasdaq index in the two sessions.

The MOF said the Taiwan market was highly correlated with its U.S. counterparts so it was no surprise for the volatility.

The government has measures in place to take on such wild market fluctuations, the MOF said, adding the Financial Supervisory Commission has measures in place to curb short selling before trading Monday and the measures will remain in effect through Friday in a bid to calm the market, though the move made little impact Monday.

In addition, the Cabinet has pledged NT$88 billion to help Taiwanese businesses including the electronics and steel industries set to be hard hit by Trump's tariffs, the MOF said.

Moreover, the MOF said, President Lai Ching-te (賴清德) has said Taiwan will negotiate with the U.S. starting with a goal of "zero tariffs," modeled after the United States-Mexico-Canada Agreement (USMCA) while pledging to expand its investments in the U.S. market.

In the statement, the stabilization fund said it believed volatility in the market will be short-lived and market attention is expected to return to Taiwan's sound fundamentals eventually so investors should act rationally.

In its last market intervention from July 13, 2022 to April 13, 2023, the eighth time in its history, the stabilization fund poured about NT$54.51 billion into the market to counter volatility resulting from the U.S. Federal Reserve's aggressive rate hikes. During the period, the Taiex rose more than 10 percent.