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Daily lower limit for bourse halved

“Our financial fundamentals remain healthy, but our stock market has been affected by the global markets.”

— Gordon Chen,FSC chairman

Under pressure to curb the impact of plummeting global stock markets, the Cabinet said last night it would halve the daily drop limit on the stock market for one week.

Financial Supervisory Committee (FSC) Chairman Gordon Chen (陳樹) told a press conference that the maximum allowable daily drop in the stock market would be halved from 7 percent to 3.5 percent this week. The maximum daily increase will remain unchanged at 7 percent.

“Our financial fundamentals remain healthy, but our stock market has been affected by the global markets and investors have lost confidence,” Chen said when asked why the committee had taken the temporary measure.

“We hope to help investors calm down this week by helping them realize that the plunge in global markets has not had a serious impact on our domestic market,” he said.

The Cabinet reached a decision after hours of meetings with high-ranking financial officials on Saturday night and yesterday afternoon.

Chen said the committee would hold meetings with the management committee of the National Stability Fund and that the fund would continue to invest in the local market.

Minister of Finance Lee Sush-der (李述德), who was also present at the news conference, said the Ministry of Finance would encourage the government’s four investment funds and state-owned banks to make “necessary” injections in the local market.

A ban on short selling stocks imposed last week by the financial regulator will, however, be extended to Dec. 31.

The Cabinet met yesterday to discuss further measures to cushion the impact of the spiralling global economic crisis.

FSC Vice Chairwoman Lee Chi-chu (李紀珠) has made it clear that suspending trading is not on the government’s list of options.

The stock market was closed on Friday for the Double Ten national holiday. Elsewhere in Asia, major markets by plummeted more than 7 percent.

Analysts said Taiwan’s weighted index could drop below the 5,000-point mark and even dip to 4,600 this week.

In the week to Thursday, the index closed down 611.52 points, or 10.65 percent, at 5,130.71, after a 3.16 percent fall the previous week.

Pressure has mounted on the administration of President Ma Ying-jeou (馬英九), with polls showing flagging approval ratings.

Ma, who assumed the presidency earlier this year, made a campaign promise to improve the economy and boost GDP growth to 6 percent.

The nation’s exports last month dropped 1.6 percent from a year earlier to US$21.85 billion — the first year-on-year decline in 18 months.

Last month Ma appointed Vice President Vincent Siew (蕭萬長) to lead an ad hoc economic advisory panel to help address the global economic downturn.
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