Taiwan activated its market stabilisation fund on Friday after Taiwan stocks suffered their worst week in a quarter of a century. The Taiex fell 1,873.08 points, or 4.51 percent, to 39,701.64, dropping below 40,000 for the first time in the rout.
The drop left Taiwan stocks more than 20 percent below their October 6 peak of 49,968.92. The index fell 12.19 percent on the week, its worst week in 25 years, and Friday was its seventh straight decline. At its low on Friday, the Taiex had plunged as much as 3,737.67 points in a single session, a record intraday point drop.
The National Financial Stabilization Fund stepped in on Friday evening, when its management committee held an emergency meeting and authorised its executive secretary to deploy money as conditions warrant. It was the 10th intervention by the fund since 2000 and the first in about 10 months, after its previous mission ended in January. The fund is capped at NT$500 billion, or about $15.26 billion, and it named no amount for this round. The decision puts Taiwan stocks under the fund’s watch for the first time since January.
The committee acted under Article 8 of the law that set up the fund, which allows intervention when major events at home or abroad, or large movements of international capital, hit public confidence and threaten disorder in financial markets. The fund said Taiwan stocks rest on good economic fundamentals, but the market is dominated by technology shares that move closely with the Philadelphia Semiconductor Index, which fell 15.7 percent on the week.
Taiwan stocks and the short-selling curbs
Taiwan’s Financial Supervisory Commission announced its own measures on Friday, taking effect from Monday, November 9. Intraday orders to sell borrowed shares will be capped at 3 percent of a stock’s average daily volume, down from 30 percent, and the minimum margin on short sales rises to 130 percent from 90 percent. The commission also urged companies to buy back their own shares.
Taiwan Semiconductor Manufacturing Company, the island’s largest listed firm, showed how concentrated the market has become. TSMC makes up more than 40 percent of the Taiex by market value, hit its 10 percent limit-down during Friday’s session and closed 4.69 percent lower at NT$2,135. When TSMC falls that far, the whole index follows.
Taiwan stocks hit by foreign selling
Foreign selling has driven the slide in Taiwan stocks. Overseas investors sold a record net NT$994.3 billion, about $30.3 billion, of Taiwanese shares in October, and a further NT$524.4 billion, about $16 billion, in the first six trading days of November. Foreign holdings of equities, bonds and deposits equalled 292 percent of the central bank’s reserves at the end of October.
The trigger was the United States midterm elections. Investors feared that Democratic victories in both chambers of Congress, along with governorships including Texas, a major data-center hub, could curb spending on data centers. The Nasdaq fell 5.5 percent on Thursday night, its worst day since April 2025, and Asian chip markets followed it down.
The fund can damp swings in Taiwan stocks, but it cannot stop foreign outflows on its own. Its statement tied the fall to steep losses on United States and major Asian stock markets after the midterm elections, and said the decisive factor is the path of the United States semiconductor index. The fund’s money is a buffer against disorder, not a floor under prices.
What happens on Monday
Taiwan stocks enter Monday with the state fund on call and the short-selling curbs in force. The fund’s executive secretary can deploy money as conditions warrant, and the commission’s limits on borrowed-share sales take effect the same day. The market still holds a large gain for the year: the Taiwan Stock Exchange said the Taiex was up 48.29 percent in 2026 as of November 4, a reminder of how far it had climbed before the fall. The exchange also moved to calm nerves, saying the market had shown resilience this year.