The Executive Yuan yesterday pre-sented six measures to prop up the stock exchange after the US House of Representatives rejected a US$700 billion bailout plan.
Vice Premier Paul Chiu (邱正雄) told a press conference that short-selling of stocks would be tight-ened for the remaining months of this year under three regulations, which came into force yesterday.
The first regulation lowers the percentage of the amount of bor-rowed shares that can be traded daily to a company’s listed stock from 25 percent to 10 percent.
The second reduces the cap on trading borrowed shares from 10 percent of a company’stotal listed shares to 1 percent.
For any individual trading ses-sion, short selling borrowed stocks — previously capped at 3 percent of a company’s outstanding shares — was reduced to 0.3 percent start-ing yesterday, Chiu said.
To stabilize the embattled stock market, the government on Sept. 21 imposed a ban on short-selling for 150 companies below their closing prices in the previous session.
Chiu said the ban would be main-tained until the end of the year.
The third measure was a deal reached between the government and the Bankers’ Association of the ROC on Friday, whereby banks would agree to requests by fi rms to extend loan principals repayments due by the end of March for six months.
Chiu said the government would keep a close eye on stock market fl uctuations, adding that the state-owned National Stabilization Fund could be activated if needed.
Meanwhile, the Cabinet ordered the Financial Supervisory Commis-sion to put together a task force to address market speculation and price manipulation, Chiu said.
Chiu called on the public to re-main confi dent, as the country’s eco-nomic fundamentals remain solid.
“The government will closely monitor the fi nancial situation do-mestically and abroad, and does not rule out the possibility of introduc-ing additional measures if neces-sary,” Chiu said.
The measures were drafted at an emergency meeting convened by Chiu at 7:30am at the order of Premier Liu Chao-shiuan (劉兆玄), who heard about the failed US bailout plan from Executive Yuan Secretary-General Hsueh Hsiang-chuan (薛香川) at 4:50am, Cabinet offi cials said.
Meanwhile, Presidential Of-fi ce Spokesman Wang Yu-chi (王郁琦) said the Presidential Offi ce was studying the possibility of establish-ing a sovereign fund to revitalize national assets, as the offi ce’s eco-nomic advisory task force yesterday agreed to lower inheritance and gift taxes to encourage Taiwanese busi-nesses to invest at home.
Wang made the remarks after a meeting of the economic advisory task force headed by Vice President Vincent Siew (蕭萬長).
A sovereign fund, or sovereign wealth fund, is a state-owned invest-ment fund composed of fi nancial assets such as stocks, bonds, prop-erty or other fi nancial instruments. National assets are typically held in both domestic and foreign reserve currencies.
Wang said Siew broached the subject of a sovereign fund at yes-terday’s meeting, but the matter was not discussed.Some Canadian provinces and US states use part of their state or provincial assets to create such funds and invest them in foreign markets, Wang said.
The purpose is to stabilize their financial system, make good use of their government assets and encourage sustainable development, he said.
As the country has a substantial foreign currency reserve, Wang said, it might be advantageous to have a sovereign fund to revitalize state resources, adding that the former administration was comparatively conservative in this regard.
Wang said task force members did not agree on the exact percentage for the gift and inheritance taxes, but that many leaned toward a reduction to 10 percent.
Since the former administration allowed foreign investors to take a lion’s share of the local capital market, the market suffered when foreign investors encountered problems at home and pulled out their money, Wang said.
“It is therefore extremely important to encourage Taiwanese investors to bring their money home to offset the shortfall in foreign investment,” Wang said.
To that end, Wang said task force members agreed it was necessary to lower the gift and inheritance taxes.
Foreign funds might be a good tool to integrate state assets, Wang said, adding that the task force would deliberate on the matter.
Speaking at the closing ceremony of the annual meeting of the World Taiwanese Chambers of Commerce at the Grand Hotel yesterday afternoon, President Ma Ying-jeou (馬英九) called on the public to have confidence, saying the country would weather the economic crisis.
This is not the first time the country has encountered economic difficulties, he said, as the country experienced the first oil crisis in the 1970s, the second oil crisis in the 1980s and the Asian financial crisis in the 1990s.
With the joint effort of the people and the government, we managed to tough it out,” he said. “I believe we will do it again this time.”
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