Taiwan’s stocks were poised to fall for a third day as stricter short-selling rules failed to negate the downward pressure fueled by global risk aversion.
(Bloomberg) — Taiwan’s stocks were poised to fall for a third day as stricter short-selling rules failed to negate the downward pressure fueled by global risk aversion.
The benchmark Taiex Index dropped as much as 0.9% on Wednesday, a day after the regulator beefed up curbs on short-selling.
Chip-related shares continued to slide, with Taiwan Semiconductor Manufacturing Co. down as much as 1.5% while Global Unichip Corp. and Alchip Technologies Ltd. each slid almost 10%.
The restriction follows a similar measure initiated at end-September and may help to limit further swings in equities if chip stocks continue to sell off.
The authorities could take additional steps should the rout extend, with stock purchases by the National Financial Stabilization Fund offering a source of support for the market.
“It could have some effect, but still Taiex would be dragged by the bigger trend of the US market,” said David Chu, chairman of Hua Nan Securities Investment Management Co., referring to the short-selling rule.
If the market can digest negative news from the earnings season, it may stabilize, he added.
The limit on the volume of intraday securities lending orders will be reduced to 10% of the average daily trading volume over the previous 30 trading days from 20% effective Wednesday, the Financial Supervisory Commission said.
The FSC said the move was aimed at maintaining the order and stability of the securities market and to protect investors’ interests.
The financial regulator also raised the minimum short-sale margin requirement to 120% from 100%.
The island’s benchmark stock gauge has fallen 30% from a January peak as a hawkish Federal Reserve and tension in the Taiwan Strait hurt sentiment.
Global funds have pulled $46 billion from local equities this year to put the market on track for its biggest annual outflows in more than two decades.
(Updates with Wednesday’s market moves, analyst’s comment)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
