Stabilization fund to continue market intervention amid U.S. tariff concerns

Taipei, Oct. 11 (CNA) The National Financial Stabilization Fund will continue to intervene in the local stock market despite a significant rebound since it first entered the market in early April, with the Ministry of Finance (MOF) citing uncertainties stemming from U.S. tariff policies.

On Thursday, the last trading session ahead of the long Oct. 10 National Day weekend, the MOF said the stabilization fund will stay in the market as tariff talks between Taiwan and the U.S. are still underway and Washington has not announced a tariff on semiconductors under Section 232 investigation of the U.S. Trade Expansion Act.

In addition, the MOF said high liquidity caused by the loose monetary policies of major central banks has led to higher inflationary pressure and geopolitical unease is also impacting the global economy.

After a regular quarterly meeting on Thursday, the MOF said the stabilization fund's executive committee has decided the fund will continue to do its duty to stabilize the stock market, a move expected to shore up investor confidence and dampen pressure on the capital market.

The NT$500 billion (US$16.39 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 fund started its support on April 9, marking the ninth intervention since its establishment.

On April 2, the Trump administration announced sweeping "reciprocal tariffs" against its trading partners, including 32 percent on Taiwan.

After the long Tomb Seeping Festival weekend, the local stock market reopened on April 7, with the Taiex, the weighted index on the Taiwan Stock Exchange, plunging 9.7 percent, the steepest fall ever to 19,232.35. On April 8 and April 9, the Taiex suffered another bloodbath, diving 4.02 percent and 5.79 percent, respectively, to a recent low of 17,391.76 points

During the negotiations, Taiwan has seen its tariff cut from the original 32 percent to 20 percent. Talks continue for a lower levy than 20 percent, while Taiwan has also sought to reduce the impact of a potential tariff on semiconductors, which is the backbone of the country's exports.

Since volatility in early April, the Taiex has rebounded. From April 9 to Sept. 30, the index had soared 48.46 percent to 25,820.54, largely led by enthusiasm over artificial intelligence developments along with the stabilization fund's intervention.

During the same 122 trading sessions, the MOF said, the stabilization fund poured more than NT$12.25 billion into the stock market and the strong rebound allowed the fund to book unrealized profits of NT$3.66 billion plus more than NT$40.93 million worth of cash dividends.

On Friday, the U.S. markets came under heavy pressure with the Dow Jones Industrial Average sliding 1.90 percent and the tech-heavy Nasdaq index shedding 3.56 percent amid an escalating tariff war between the U.S. and China, after U.S. President Donald Trump threatened to raise tariffs on China-made goods to 100 percent.

Although the stabilization fund remains in place, market analysts said U.S. volatility could affect the Taiex when the local main board resumes trading on Monday after the Oct. 10 holiday weekend, as the American depositary receipts (ADRs) of contract chipmaker Taiwan Semiconductor Manufacturing Co. tumbled 6.41 percent on Friday.