Taiwan Stocks Bounce Back After Officials Step In to Calm Markets

Taiwanese shares bounced back after authorities introduced new rules to boost investor trust following a long losing run. The Taiex Index climbed up to five percent on Monday, marking its biggest jump since July thirty-first and stopping a seven-day drop that had pushed the tech market into bear territory. Taiwan Semiconductor Manufacturing Company and MediaTek led the gains by rising at least five percent each. The bounce happened after the island's market regulator and finance ministry promised to calm investor nerves, which included new limits on short selling and the option to use the five hundred billion Taiwan dollar stock stabilization fund. Asian stock markets also traded higher on Monday, even though investors worried about an investigation into Nvidia Chief Executive Officer Jensen Huang.

New Rules

The Financial Supervisory Commission announced that it will cap intraday short-sale orders for borrowed securities at three percent of a stock's average daily trading volume over the past thirty days, down from thirty percent before. The regulator also raised the minimum margin requirement for short selling from ninety percent to one hundred thirty percent. Goldman Sachs noted that while the stabilization fund helps market mood, actual money put in during past interventions was often low, though the fund historically focuses on large tech or financial stocks.

Context

Stock stabilization funds are government-backed pools of money used during major market panics to buy shares and prevent rapid price drops. Regulators often tighten rules on short selling, where traders bet that stock prices will fall, during nervous market periods to stop fast downward spirals.