Taiwan Authorizes Stabilization Fund as Taiex Falls 12%

At an emergency meeting Friday afternoon, officials pointed to the sharp market decline after the U.S. midterm elections and continued foreign selling, saying investor confidence was significantly weak. They said “market confidence is clearly insufficient in the short term” and pledged measures to restore order.

The Taiex is about 20% below its 2026 peak, placing it in bear-market territory. The slump followed concerns that a Democratic victory in the U.S. midterms could bring tighter regulation, slowing construction of AI infrastructure and reducing demand for related hardware.

Taiwan is home to TSMC, the world’s largest contract chipmaker, and has benefited from the AI investment boom through record stock-market highs and surging exports. The stabilization fund said economic fundamentals remain sound, but warned that the market is dominated by high-tech stocks and closely tracks the U.S. Philadelphia Semiconductor Index.

Established in 2000, the fund can deploy up to 500 billion Taiwan dollars, or about US$15.11 billion. Its market intervention during the Covid-19 pandemic helped lift the Taiex by more than 40%, according to the National Treasury Administration.

The Financial Supervisory Commission said it will tighten short-selling restrictions from Nov. 9. It also urged listed companies to consider share buybacks and hold investor briefings. South Korean authorities took steps to support their own battered stock market earlier Friday, as the AI-related selloff spread across the region.