Finance officials yesterday called on investors to remain calm, saying that the National Financial Stabilization Fund would intervene to shore up local shares when necessary.
The request came 45 minutes before the stock market opened, after Wall Street experienced its worst slump since 1987, as business interruptions related to the COVID-19 pandemic escalate around the world.
“The stabilization fund can convene extraordinary meetings and unleash capital to support the local bourse when necessary,” Minister of Finance Su Jain-rong (蘇建榮) told a news conference after the Dow Jones Industrial Average fell 10 percent on Thursday.
The fund, with NT$500 billion (US$16.55 billion) capital ready to deploy, has activated six times to mitigate massive shocks from abroad and at home that threatened to throw the market into disarray, Su said.
Things have not yet grown out of control, the minister said, adding that COVID-19 infections in Taiwan are quite low and the TAIEX has been relatively resilient, thanks to proactive response measures and healthy economic fundamentals.
The stock market shed 10.82 percent in the past two weeks, milder than a 26.88 percent drop on the Dow, a 29.26 percent retreat in British shares and 32 percent corrections in German and French shares, Su said.
The US and Europe are struggling to tackle the virus’ spread, which appears to have plateaued in Asia, where the number of new infections has significantly declined in China, South Korea and Japan, he said.
Taiwan took quick measures to contain the virus and ease the adverse effects on companies and individuals, the minister said, citing the NT$60 billion relief program and incentives to facilitate capital repatriation and trade rerouting for companies based in China.
The ongoing market rout has made local shares cheaper and more attractive, in light of their generous dividends and low price-to-earnings ratios, lower than stocks in the region and globally, Su said.
Taiwanese exports logged a 25 percent increase last month, while South Korea, China, Singapore, Hong Kong and Japan all slipped into contraction, the minister said.
The nation would continue to benefit from order transfers and supply chain realignment resulting from US-China trade tensions and more recently, a slow resumption of work in China owing to COVID-19, Su said.
That outbreak has also affected Taiwan’s economy, but the effects are expected to be temporary and limited to the first half of this year, economists have said.
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