The National Stabilization Fund (國安基金) could be activated to intervene in the local stock market once the US' war against terrorism breaks out, but pundits yesterday strongly questioned the use and effectiveness of intervention.
President Chen Shui-bian (
Besides the current measures stipulated by the administration -- including halving the daily share price down-limit from 7 percent to 3.5 percent and lowering the interest rate to 0.5 percentage point -- Chen requested further steps to stabilize the stock and foreign exchange markets.
Local Chinese-language media reported that should a war break out, activating the stabilization fund to intervene the local stock market could not be ruled out.
The question is whether intervention is appropriate as NT$100 billion of the NT$500 billion fund has already been lost.
"A war ... could fit within the regulations of using the National Stabilization Fund, which is to cope with an emergency situation, either domestically or international, that might strongly affect the domestic stock market," said Norman Yin (殷乃平), a banking and finance professor at National Chengchi University.
"However, the timing and magnitude of such intervention should be very prudent. The Executive Yuan does not have the expertise to determine when and how to intervene in the market. The task should be left to securities professionals."
According to Yin, more than NT$1 trillion (US$30 billion) worth of foreigners' holdings might be unloaded during an emergency. "Does the stabilization fund have the capacity to [support such a sell-off]? If the answer is no, then we should be more careful about activating the fund," he said.
"After all, the fund has generated huge losses since last year by borrowing money from the banking sector. All the losses and interest burden are going to be part of our fiscal deficit."
Other pundits agreed.
"The government should not intervene in the stock market, especially when we do not know how long the possible war will last and what damage it might reap," said Yophy Huang (
"Since Taiwan is a small economy and easily affected by international factors, Taiwan should act just like other countries and let its markets reflect what is really going on.
"If we intervene in the market, it might mislead local investors on share prices which did not reflect the stock's intrinsic value," Huang said.
Another factor that worried Huang is that the stabilization fund, along with the four government funds, has failed to revive the market since it first intervened in the market last year.
"The general public does not have faith in intervention. Why bother to lose [more] money on something that is not going to work? If the situation is really bad, what the administration could do is to close the market for a day or two. ... It's simply not wise to do things against market mechanisms," Huang said.
CHIP HANG-UP: Surging memorychip prices would deal a blow to smartphone sales this year, potentially hindering one of MediaTek’s biggest sources of revenue MediaTek Inc (聯發科), the world’s biggest smartphone chip designer, yesterday said its new artificial intelligence (AI) chips used in data centers are to account for 20 percent of its total revenue next year, as cloud service providers race to deploy AI infrastructure to meet voracious demand. MediaTek is believed to be developing tensor processing units for Google, which are used in AI applications. While it did not confirm such reports, MediaTek said its new application-specific IC (ASIC) business would be a new growth engine for the company. It again hiked its forecast for the addressable ASIC market to US$70 billion by 2028, compared
MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it plans to double investment in data center-related technologies, including advanced packaging and high-speed interconnect technologies, to broaden the new business’ customer and service portfolios. The chip designer is redirecting its resources to data centers, mainly designing application-specific integrated circuits (ASIC) with artificial intelligence (AI) capabilities for cloud service providers. The data center business is forecast to lead growth in the next three years and become the company’s second-biggest revenue source, replacing chips used in smart devices, MediaTek president Joe Chen (陳冠州) told a media event in Taipei. “Three or four years
Until US President Donald Trump’s return a year ago, when the EU talked about cutting economic dependency on foreign powers — it was understood to mean China, but now Brussels has US tech in its sights. As Trump ramps up his threats — from strong-arming Europe on trade to pushing to seize Greenland — concern has grown that the unpredictable leader could, should he so wish, plunge the bloc into digital darkness. Since Trump’s Greenland climbdown, top officials have stepped up warnings that the EU is dangerously exposed to geopolitical shocks and must work toward strategic independence — in defense, energy and
Motorists ride past a mural along a street in Varanasi, India, yesterday.
RSS