Taiwan Authorises Its Stabilization Fund to Step In After a 12.19% Weekly Taiex Slide
Taiwan’s National Financial Stabilization Fund authorised its executive secretary on 6 November to deploy money to steady the stock market, after the Taiex lost 12.19% in a week.
Taiwan’s market backstop is on call again less than 10 months after it stood down, and regulators announced curbs on short selling the same day. The fund named no amount; the law caps it at NT$500 billion, equivalent to $15.26 billion. In The Edge’s reading, that ceiling is a signal more than a counterweight; for scale, it equals 33% of the NT$1.52 trillion foreigners have sold since October began.
The committee invokes Article 8 for the fourth time since 2020
The fund’s management committee met at 14:30 Taipei time (06:30 GMT) in its 131st extraordinary session and decided by consensus. It authorised the executive secretary to use the fund’s money as the situation requires to carry out a market stabilisation mission.
The legal basis is Article 8 of the Act for the Establishment and Administration of the National Financial Stabilization Fund. It lets the committee deploy the fund when major events at home or abroad, or large movements of international capital, sharply hit public confidence and threaten disorder in financial markets.
Under the same article, the fund may trade securities on the exchange and over the counter, and trade futures. The committee must report the decision to the Legislative Yuan within three months.
Article 4 sets the fund’s total resources at NT$500 billion. Up to NT$200 billion can be borrowed from banks against shares the state owns, and up to NT$300 billion from the postal deposit system and four public insurance and pension funds.
The committee is chaired by the Vice Premier of the Executive Yuan, and its members include the central bank governor and the finance minister. Committee members, its staff, any institution it hires and anyone who learns its plans from them must keep those plans confidential and may not trade in the markets where the fund operates, on pain of up to seven years in prison and a fine of up to NT$10 million.
The fund’s own press archive records three earlier activations since 2020, listed below. The April 2025 decision followed a 9.7% fall on 7 April, the largest on record by the fund’s account, after the United States announced reciprocal tariffs.
National Financial Stabilization Fund missions since 2020
| Mission | Activated | Stopped |
|---|---|---|
| 2020 | 19 Mar 2020 | 12 Oct 2020 |
| 2022 | 12 Jul 2022 | 13 Apr 2023 |
| 2025 | 8 Apr 2025 | 12 Jan 2026 |
| 2026 | 6 Nov 2026 | Open |
Dates of the fund’s announcements on the Ministry of Finance site; the 2025 mission traded from 9 April 2025.
Foreign investors sell a record NT$994.3 billion in October
The fund tied the fall to steep losses on US and major Asian stock markets after the US midterm elections. It said Taiwan’s economic fundamentals are good, but its market is dominated by technology shares that move closely with the Philadelphia semiconductor index.
By the fund’s account, the Taiex’s weekly loss was second to that index’s 15.7% fall. It judged market confidence clearly insufficient in the short term, with international political and economic uncertainty still high.
Foreign selling deepened the slide, the fund said. Foreign investors sold a net NT$994.3 billion ($30.34 billion) of Taiwan Stock Exchange shares in October, the largest monthly figure on record.
They sold a further NT$524.4 billion ($16.0 billion) in the first week of November. On Friday alone the figure was NT$91.2 billion.
Local investment trusts bought into the fall. Securities investment trust companies bought a net NT$128.8 billion of shares over the week, exchange data show, including NT$26.7 billion on Friday.
The Taiex closed at 39,701.64 on Friday, a seventh straight decline, as our Asia wrap set out. During the session it fell as far as 37,837.05, which was 8.99% below Thursday’s close.
The index is now 20.55% below this year’s high of 49,968.92, reached in trading on 6 October. It is still 37.07% higher than at the end of last year.
Taiex closes, 30 October to 6 November
| Session | Close | Change |
|---|---|---|
| 30 Oct | 45,211.83 | -2.49% |
| 2 Nov | 44,920.14 | -0.65% |
| 3 Nov | 43,307.54 | -3.59% |
| 4 Nov | 42,948.91 | -0.83% |
| 5 Nov | 41,574.72 | -3.20% |
| 6 Nov | 39,701.64 | -4.51% |
| Week | 39,701.64 | -12.19% |
Closing levels of the Taiwan Stock Exchange Capitalization Weighted Stock Index; daily changes are against the previous session’s close, and the week is measured against the 30 October close.
Regulators cap intraday sales of borrowed shares at 3% of volume
The Financial Supervisory Commission announced its own measures on 6 November, effective from Monday 9 November. Intraday orders to sell borrowed shares are capped at 3% of a stock’s average daily volume, down from 30%.
That average is taken over the previous 30 business days. Sales that brokers make to hedge put warrants, exchange traded notes, structured products and equity derivatives, or as liquidity providers and market makers, and hedging by futures dealers making markets in stock options and futures, are exempt.
The minimum margin on short sales of listed and over the counter shares rises to 130% from 90%. Investors may also, with their broker’s or lender’s consent, top up margin with other liquid collateral that can be valued objectively, such as foreign securities bought through brokers.
The commission urged listed companies to consider share buybacks, which are already filed electronically, and to brief investors on their operations and prospects. It asked investors to act rationally and in line with their own strategies.
The central bank’s October operations to keep order in the currency market, and foreign holdings worth 292% of its reserves, were set out in our 5 November report on Taiwan’s reserves.
The last mission ended with a NT$9.93 billion profit
The fund’s previous mission lasted 279 days and ended when the committee stopped it in January. It then sold its shares over 114 days, finishing on 6 May.
Its final account, published on 13 July, put the net profit at NT$9.93 billion. The shares it bought had cost NT$12.25 billion.
By the fund’s count, the Taiex rose 65.59% between the 2025 entry and the January exit. It gained a further 34.58% while the fund sold.
When it stood down, the committee said the Article 8 conditions no longer applied. It added that it could meet at any time, if needed, to discuss whether to authorise a new mission.
What to watch:
9 November: the Financial Supervisory Commission’s short selling and margin measures take effect.
4 December, 08:20 GMT: the Central Bank of the Republic of China (Taiwan) publishes November foreign exchange reserves.
Figures are from the National Financial Stabilization Fund’s statement published by the Ministry of Finance on 6 November 2026 and its earlier statements of 8 April 2025, 12 January 2026 and 13 July 2026; the Financial Supervisory Commission’s announcement of 6 November 2026; and Taiwan Stock Exchange index and investor trading data. Dollar equivalents are The Edge’s calculations at the Central Bank of the Republic of China (Taiwan)’s interbank closing rate of NT$32.768 per dollar on 6 November 2026; percentages, sums and comparisons not attributed to a source are The Edge’s calculations.
Sources: Ministry of Finance (Taiwan), Financial Supervisory Commission, Taiwan Stock Exchange, Central Bank of the Republic of China (Taiwan), Laws and Regulations Database of the Republic of China (Taiwan), The Edge.
