A short-selling ban on the local bourse is to be removed from today, as the COVID-19 situation in Taiwan has steadily improved and local equity markets have stabilized, the Financial Supervisory Commission (FSC) announced yesterday.
The short-selling ban was implemented on March 19, when the TAIEX tumbled 5.83 percent to 8,681.34 points, the lowest in 42 months, due to fears over the spread of the coronavirus worldwide.
The ban targeted stocks on the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEX) that showed a decline of 3.5 percent or more on March 18.
The commission had planned to end the ban on Friday next week, but decided to relax it earlier as the TAIEX and the TPEX have recovered to where they were before the outbreak, Securities and Futures Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) told a news conference in New Taipei City yesterday.
The TAIEX yesterday rose 0.23 percent to close at 11,637.11 points, compared with 11,970.63 points five months earlier, while the TPEX dipped 0.04 percent to 154.56 points, compared with 146.57 points five months earlier.
“We banned short-selling in March in a bid to curb speculative trading amid irrational declines on the stock market, but we have not seen panic selling for a while, which is why we think it is time to let the trading mechanism return to normal,” Tsai said.
Some European securities regulators, which had imposed a tighter ban than in Taiwan by prohibiting short-selling of any stock, removed their bans last month due to less-turbulent markets, she said.
Some analysts thought the ban would generate fear among investors instead of stabilizing the market, but the move helped keep the market from diving, while the slowing of the outbreak and rebounding businesses also helped maintain investor confidence, Tsai said.
Average daily market turnover was NT$110 billion (US$3.69 billion) in April and NT$115 billion last month on the Taiwan Stock Exchange, up from NT$92 billion in February, suggesting that the ban did not negatively affect turnover, she added.
“Although the regulator canceled the ban today, it is not likely that many investors will immediately begin to short-sell stocks tomorrow, as many listed companies are holding their shareholders’ meetings and investors will prefer to take a wait-and-see approach for the moment,” Moore Securities Investment Consulting Co Ltd (摩爾證券投資顧問) analyst Chang Chih-cheng (張志誠) said by telephone.
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