The Financial Supervisory Commission (FSC) yesterday announced further curbs on short selling after the TAIEX plunged to its lowest level in nearly two years.
Starting today, the volume of intraday securities lending to short sell a stock is to be lowered to 10 percent of the stock’s average daily trading volume over the previous 30 sessions, down from 20 percent, the FSC said.
In addition, the amount of money an investor must deposit for securities borrowing is to be raised to 120 percent of a stock’s value from 100 percent, effectively increasing the cost of short selling, it said.
Photo: CNA
The TAIEX yesterday tumbled 4.35 percent, or 596.25 points, to 13,106.03 after new curbs by Washington on Chinese access to US technology triggered panic selling in technology shares, especially top chipmakers.
Investors also scrambled to dump large-cap electronics stocks in the wake of heavy losses suffered by the technology sector on Wall Street in the previous two sessions.
Yesterday’s decline was seventh-worst slump in the TAIEX’s history, led by a 8.33 percent drop in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares, Taiwan Stock Exchange data showed.
TSMC closed at NT$401.50 and its losses contributed about 300 points to the TAIEX’s decline.
Turnover totaled NT$217.760 billion (US$6.83 billion) as foreign players cut their holdings in local shares by a net NT$34.28 billion, while proprietary traders slashed positions by NT$5.03 billion.
Deputy Minister of Finance Frank Juan (阮清華), who serves as executive secretary of the National Stabilization Fund, said the local bourse took its cues from Wall Street during the Double Ten National Day holiday.
The TAIEX was the worst performer among regional stock markets, as TSMC has a heavy weighting in the index and a US ban on chip exports to China cast a shadow over TSMC’s profitability, Juan said.
TSMC is to hold an investors’ conference tomorrow.
“The National Stabilization Fund will shore up local shares, and other government agencies would also help if necessary,” Juan said.
The exchange said the rout had much to do with global capital movements responding to monetary tightening and geopolitical conflicts.
While Taiwan is not immune to economic downturns, local firms have remained resilient, it said.
Combined revenue of the nation’s listed firms last month rose 18.2 percent year-on-year, it addeed.
In the first nine months of this year, combined revenue at listed firms increased 12.83 percent year-on-year, which would support GDP growth this year, the exchange said.
However, Cathay Futures Consultant Co (國泰證期顧問) analyst Tsai Ming-han (蔡明翰) said the TAIEX became technically fragile following yesterday’s plunge.
“As rate hike concerns continue, there is no indication where the TAIEX will find the nearest technical support level,” Tsai said. “In particular, inventory adjustments are expected to add to the selling of semiconductor stocks and it is possible TSMC could test NT$400 soon.”
Additional reporting by staff writer and CNA
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