GLOBAL ROUT: The National Stabilization Fund was not activated because it focuses on ‘non-economic factors,’ Deputy Minister of Finance Frank Juan said by telephone
By Kao Shih-ching / Staff reporter
The TAIEX yesterday slumped 6.31 percent to close at 9,806.11 points, its largest one-day drop of all time, but the government decided not to activate the National Stabilization Fund to prop up the local stock market.
Even though the Ministry of Finance on Sunday said that the government would not rule out the possibility of using the NT$500 billion （US$16.07 billion） fund in case of volatility on the local stock market, the government yesterday decided not to activate the fund for the time being after a one-and-a-half hour meeting.
Minister of Finance Su Jain-rong （蘇建榮） said before the meeting that yesterday’s sell-off in the local market stemmed from an overnight plunge on Wall Street, the surging yields of US Treasuries and the US Federal Reserve’s interest rate increases.
“So far, I have not seen any non-economical factor” rattling the stock market, which is key to activating the fund, Su said.
The TAIEX closed down 660.72 points, surpassing the previous record drop of 617.65 points on March 3, 2000, with turnover totaling NT$205.33 billion.
The local market fared the worst compared with its regional peers, after the Dow Jones Industrial Average fell more than 800 points overnight, the worst fall in eight months.
The TAIEX has declined more than 1,200 points so far this month, Taiwan Stock Exchange data showed.
The index’s slump was characterized by shares of Largan Precision Co （大立光）, a smartphone camera lens supplier, which collapsed 9.89 percent to close at NT$3,235, and shares of Taiwan Semiconductor Manufacturing Co （台積電）, the largest contract chipmaker in the world, which were down 6.76 percent at NT$227.5 amid heavy selling pressure.
Deputy Minister of Finance Frank Juan （阮清華）, the executive secretary of the National Stabilization Fund, yesterday told the Taipei Times by telephone that many listed companies have increased their earnings this year and the government remains confident in their fundamentals.
Almost every member of the committee said “we should keep monitoring” rather than “it is time to activate,” Juan said, adding that it was not hard to reach a conclusion at the meeting.
Out of the six times the fund has been activated, four were when the TAIEX fell below 6,000 points, Juan said, adding that the committee usually focuses on “non-economic factors” that might lead investors to make irrational decisions.
The committee would hold a special meeting whenever it is necessary to cope with the situation on the stock market, the ministry said in a statement.