Taiwan Activates Market-Stabilization Measures to Stem AI Bleeding

By Jiahui Huang and Fabiana Negrin Ochoa

Taiwanese authorities activated market-stabilization measures on Friday, joining South Korea in moving to stem the bleeding in local equities caused by the global selloff in artificial intelligence-related stocks.

At an emergency meeting on Friday afternoon, the National Financial Stabilization Fund of Taiwan authorized the executive secretary to deploy funds as needed to stabilize the market.

Officials cited the sharp downturn in Taiwan's stock market in the wake of the U.S. midterm elections, and continued selling by foreign investors, indicating a significant lack of investors' confidence.

The benchmark Taiex index shed 12% this week, tumbling alongside other tech-heavy indexes as the Democrats' victory in the U.S. midterms stoked concerns about tighter regulations that could slow the AI infrastructure buildout, hurting demand for AI-related hardware.

The Taiex is now down about 20% from its 2026 high, putting it in bear-market territory and underscoring the downside of breakneck, AI-fueled growth.

Home to the world's largest contract chipmaker, TSMC, Taiwan occupies a critical role in the semiconductor supply chain. It has reaped the windfall of the global AI investment boom: The stock market has scaled record highs, while exports have surged, spilling over into broader economic growth.

The Taiwan fund alluded to AI concentration vulnerability on Friday, saying that the island's economic fundamentals remain sound but that the market is dominated by high-tech stocks and closely correlated with the U.S. Philadelphia Semiconductor Index.

South Korea, Asia's other chip-making powerhouse, has suffered from the AI rout too. Earlier on Friday, authorities in Seoul also stepped up efforts to steady Korea's battered stock market.

Established in 2000, Taiwan's stabilization fund is tasked with stepping in to quell market turbulence. It has a maximum deployable capital of 500 billion Taiwan dollars at its disposal, or about US$15.11 billion.

During the Covid-19 pandemic, the fund's presence in the stock market lifted the Taiex by more than 40%, according to the National Treasury Administration.

Officials on Friday said "market confidence is clearly insufficient in the short term," vowing to take the necessary measures to restore order.

Taiwan's Financial Supervisory Commission said it will tighten short-selling restrictions from Nov. 9 to combat volatility.

The FSC also encouraged listed companies to consider share buybacks and hold investor briefings to replenish confidence.

Write to Jiahui Huang at jiahui.huang@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com

(END) Dow Jones Newswires

November 06, 2026 06:16 ET (11:16 GMT)