The government will continue to intervene in the stock market using the state-owned National Stabilization Fund (國安基金) to support share prices for one more month in view of the global financial crisis, Vice Finance Minister William Tseng (曾銘宗) said yesterday.
Tseng was speaking at a press conference that followed a meeting of the fund’s management committee led by Vice Premier Paul Chiu (邱正雄).
Authorization given by the management committee on Sept. 19 to mobilize the fund was due to end tomorrow, but the mobilization has now been extended to Nov. 17.
Tseng assured investors that the government has sufficient resources to prop up the stock market, saying that a mere NT$ 7.1 billion (US$219.1 million) of the fund, which amounts to NT$500 billion, was used to purchase shares as of the end of last month.
Chiu said that the fund had outperformed the TAIEX benchmark index and many institutional investors last month as it had lost only NT$150 million.
The performance of the fund this month would not be announced until next month, Tseng said. Tseng also acts as the executor of the fund.
In January 2000, the legislature passed the Regulation on the Establishment and Management of the National Stabilization Fund (國家金融安定基金設置及管理條例). The regulation states that the fund is able to use state-owned shares in public or private enterprises to borrow up to NT$200 billion from the banking industry and up to NT$300 billion from four government funds — the labor insurance fund (勞保基金), the labor pension fund (勞退基金), the civil servant pension fund (退撫基金) and the postal savings fund (郵政儲金).
If the stabilization fund loses money, the government must make provisions in its next budget to make up for the loss, the regulation stipulates.