Taiwan Deploys Stabilization Fund Worth More Than 20 Trillion Won…Focus on South Korea’s Response
Taiwan held a meeting after Asian stocks plunged and decided to deploy its National Financial Stabilization Fund; it was reported to have begun buying stocks on Monday. The amount was 500 billion Taiwan dollars, equivalent to more than 20 trillion won. A figure was also cited showing that stocks had risen one month after the fund was deployed in 77.7% of previous cases.
In South Korea, the possibility of deploying a stock-market stabilization fund and banning short selling has been discussed. The host explained that the stabilization fund is not money already set aside in cash; rather, participating institutions provide funds when needed, meaning that the actual amount raised and the timing and scale of its use have not been determined. The counterargument that a short-selling ban could hinder inclusion in the MSCI developed-market index and other goals was also mentioned.
If volatility continues, measures discussed included using futures-related mechanisms to curb intraday swings, monitoring market disruption involving Samsung Electronics and SK hynix shares and inverse ETFs, and checking for violations related to short selling. The point was that if a blanket short-selling ban is too burdensome, investigations and enforcement against illegal practices such as naked short selling could be strengthened. No decision has been made on when or in what form any actual measures will be introduced.