[TAIPEI] Taiwan on Tuesday gave the green light for a US$15.3 billion fund to stabilise its troubled stock market, after fears of a slowdown in China sent shares diving.
Taipei shares posted the island's steepest ever intra-day decline on Monday, hit by a rout in Chinese equities that sparked a panic sell-off in European and US markets.
In response, the government will use the National Financial Stabilisation Fund, with its Tw$500billion of firepower, to stabilise the market during times of volatility.
Beyond that, executive secretary of the restabilisation fund committee Wu Tang-chieh will be left to decide on how to invest, according to a government statement.
"The domestic stock market is affected by poor fundamentals internationally and domestically, leading to a drop in investor confidence," Wu said Tuesday, adding that Taipei stocks have been among the main losers in global bourses this year.
Taiwan's economy has been slowing, posting its weakest quarter in three years in the three months to June, as weak global demand and rising competition have hurt exports.
Shares rebounded by 3.58 per cent Tuesday, boosted by the announcement of government intervention, after plunging 7.49 per cent at one point on Monday.
The Financial Supervisory Commission may also implement other measures to stabilise the stock market when necessary, chairman Tseng Ming-chung said, without elaborating.
Companies are also supporting the market with share buybacks. Smartphone-maker HTC Corp. said Monday night it will buy up to six per cent of its outstanding shares, roughly Tw$2 billion at the last close, over the next two months.