The National Stabilization Fund’s (NSF) executive committee is open to expanding the size of the NT$500 billion (US$16.02 billion) scheme to NT$1 trillion, as long as the move helps maintain the stability and resilience of the local stock market amid an increasingly complex and challenging global environment, the fund said in a written report to the Legislative Yuan.
The report came as the legislature’s Finance Committee is slated today to review an amendment to the Act for the Establishment and Administration of the National Stabilization Fund (國家金融安定基金設置及管理條例) proposed by lawmakers, including Democratic Progressive Party Legislator Kuo Kuo-wen (郭國文) and Lee Kuen-cheng (李坤城), to double the fund’s size.
Under the current regulations, the NSF can utilize two sources of funding: up to NT$200 billion in borrowing from financial institutions, collateralized by stocks held by the National Treasury Administration in public and private enterprises, and as much as NT$300 billion in borrowing from the four major government funds — Civil Servants Pension Fund, the Postal Savings Fund, the Labor Insurance Fund and the Labor Pension Fund.
Photo: Ritchie B. Tongo, EPA-EFE
Lawmakers have proposed removing the ceilings on the two borrowing sources to give the NSF greater flexibility to raise funds amid market turbulence. The written report showed the fund aims to maintain the NT$300 billion ceiling for borrowing from the four major government funds, but increase the ceiling to NT$700 billion for lending from financial institutions.
The government established the stabilization fund in 2000 to serve as a buffer when major domestic or international events trigger large movements of global funds, significantly affect public confidence or cause disorder in Taiwan’s capital and financial markets.
The fund on April 9 intervened in the market amid panic sell-offs triggered by US President Donald Trump’s sweeping tariff announcement on April 2, marking the ninth intervention since its establishment.
The stabilization fund acknowledged in the report that the local stock market is susceptible to international political and economic fluctuations, as market capitalization has soared to more than NT$97 trillion as of the end of last month from NT$9.2 trillion in 2000, and the proportion of stocks held by foreign investors has climbed to 46.85 percent from 8.44 percent over the same period.
From April 9 to Nov. 30, foreign investors sold a net NT$394 billion of local shares, it added.
The TAIEX yesterday closed down 121.18 points, or 0.43 percent, at 28,182.60, as investors avoided taking risks ahead of the US Federal Reserve’s policy-setting meeting this week. The benchmark index has risen 23.43 percent since the beginning of this year.
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