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Tuesday saw Taiwan's government authorize the activation of its $15 billion stock stabilization fund in an effort to support the market following significant drops. The decision came as a response to the new 32% tariffs imposed by U.S. President Donald Trump on Taiwan, which has a considerable trade surplus with the United States. The announcement of these tariffs last week triggered a market sell-off, with the Taiwan stock market experiencing a steep decline on Monday, the first trading day after the holiday on Thursday and Friday.
The Ministry of Finance in Taiwan stated that the National Stabilization Fund, with assets worth approximately T$500 billion ($15.15 billion), is now cleared to intervene in the stock market. The fund's mandate is to execute market stabilization measures when necessary to ensure the stability of Taiwan's stock trading market. The fund's intervention is a direct measure to counter the market volatility that has been attributed to the newly announced U.S. tariffs.
The benchmark index in Taiwan took a significant hit, dropping close to 10% on Monday and an additional 4% on Tuesday, reaching a 14-month low. The Ministry of Finance noted the strong international panic atmosphere and pointed out that foreign investors have been selling their holdings since the beginning of the year, which has been detrimental to the stability of the Taiwan Stock Exchange.
The ministry's announcement indicated a concern for market stability and the need for government intervention to mitigate the effects of the sell-off. Taiwan has a history of using the National Stabilization Fund in times of crisis, including during the onset of the COVID-19 pandemic, to support its stock market. The activation of the fund is a strategic move to curb the downward trend and restore investor confidence in the Taiwanese market.
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