The steering committee of the National Stabilization Fund (NSF) on Thursday held a meeting to discuss domestic and international developments that could affect Taiwan’s stock market. The committee decided to allow the NT$500 billion (US$16.3 billion) fund to remain active to support local shares, as Taiwan-US tariff negotiations, as well as the results of a US investigation into semiconductors and other tech products, have not yet been finalized, begging caution.
The committee said that because uncertainties in international politics and the economy — such as rising financial assets amid easy monetary policy, ballooning global debt, inflation and escalating geopolitical conflicts — persist, the fund must continue implementing its market stabilization mission to maintain investor confidence and capital market stability.
The committee on April 8 activated the fund to shore up the local market amid panic-driven sell-offs triggered by US President Donald Trump’s sweeping tariff announcement on April 2. The NSF invested NT$12.25 billion in local equities between April 9 and Sept. 30 and recorded NT$3.66 billion in unrealized gains and NT$40.92 million in dividend receivables, the committee’s latest report showed.
Taiwan’s shares surpassed 27,000 points to hit new highs last week, powered by booming demand for artificial intelligence and a rally in tech stocks abroad. The NSF helped support the local market and shored up investor confidence, with the TAIEX surging 9,910.16 points, or 56.98 percent, from April 9 to Thursday, Taiwan Stock Exchange data showed.
Given a sharp escalation in US-China trade tensions on Friday — triggered by Trump’s threats of new, massive tariffs on Chinese imports and Beijing’s reciprocal port fees and rare earth curbs — it is certainly understandable why there is cause for concern, and there is no harm in being cautious.
However, the discussion about the activation of the NSF remains divided. Some experts believe the pressure of the markets resembles an invisible hand that can allocate resources most effectively, so any interference would disrupt the market’s natural correction mechanism and distort stock price structure, while others believe the government’s direct support of local equities is a necessary institutional defense.
This kind of debate reflects the difficulty in striking a balance between free market policies and state intervention. No one can deny that the NSF has rarely disappointed investors. Each time it entered the market, it provided a short-term lift to stock prices and much-needed stability when market confidence was most fragile.
The stocks most frequently bought by the fund ranged from electronics and finance to traditional industries, and many of them were blue-chip stocks, which are viewed as a safe haven for investors once the market turns bearish.
To be sure, the activation of the NSF is a way to protect the market and maintain trust in the local investment environment and the country’s economic fundamentals. However, there is no guarantee that the momentum can be sustained in the months after the fund retreats, and investors looking for a longer-term investment should see fundamentals as a key consideration.
Friday came as a painful reminder for investors that tariffs are still a threat to the market, whether the NSF is in play or not. Even as tech enthusiasm buoys Taiwan and regional markets, once a trade war flares up, it could cast a shadow.
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