Taiwan Stocks Jump as Taipei Moves to Steady Markets

What moved the market

Taiwan's benchmark Taiex opened sharply higher Monday after the market watchdog and the Finance Ministry laid out steps to calm trading, breaking a seven session slide that had driven the tech heavy market into bear territory. The index jumped as much as 6.4%, led by Taiwan Semiconductor Manufacturing Co. and MediaTek Inc., both up at least 6%.

According to Singapore-based Lombard Odier senior macro strategist Homin Lee, the strong start suggests the stabilization steps "are overpowering any impact from the Jensen Huang development that many investors may see as a sideshow on the semiconductor sector's long-term trajectory."

The playbook from regulators

After Friday's close, the Financial Supervisory Commission detailed two short selling curbs starting Monday. Second, the financial regulator said it will boost the minimum margin for short selling trades to 130% from 90%.

Officials also said they are prepared to use the National Stabilization Fund, which has NT$500 billion available, or about US$15.2 billion.

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What history says about the fund

Looking at those nine prior interventions - from the dot-com bubble through the global financial crisis to the Covid 19 pandemic - On average, Taiwan's market rose 6% in the week that followed and 22% across the next year. But six of the nine episodes also saw further drawdowns of 5% to 28% within six months of the fund being activated.

What this means for your portfolio

In plain English: policy support and tighter short selling rules can stabilize prices in the near term, even as past cycles show rebounds often come with pockets of volatility. For chip heavy exposure, sentiment improved on the day, but prior National Stabilization Fund playbooks featured quick upside alongside later pullbacks.

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