Taiwan’s National Stabilization Fund Closes After Record Support

The National Stabilization Fund (NSF) in Taiwan has officially concluded its market-support operations after nearly 280 days of intervention, marking the longest period of such support in the fund’s history. This decision comes as investor confidence has rebounded and trading conditions have stabilized, allowing for the termination of its crisis response measures.

The fund, which was active since April 9, 2022, has yielded an impressive 52.56 percent return rate on a cumulative investment of NT$12.25 billion (approximately US$387.29 million). As of last month, the NSF reported an unrealized profit of NT$6.44 billion. The intervention was initiated in response to significant market volatility caused by global economic uncertainties and fluctuating cross-border capital flows.

Market Recovery Highlights

During the NSF’s intervention, the benchmark TAIEX index experienced a remarkable recovery, surging over 70 percent. It closed at a record NT$30,567.29 yesterday, up 0.92 percent from the previous trading session. This stands in stark contrast to its value of 17,391.76 at the onset of the fund’s support, a period marked by fears surrounding US President Donald Trump‘s tariffs and their impact on global markets.

Officials from the NSF emphasized that the fund’s efforts successfully stabilized local equity markets and restored investor confidence, fostering what they described as “active and orderly” trading conditions. For the entirety of last year, the TAIEX increased by 25.73 percent, with daily trading volumes surpassing NT$600 billion in 2023. This robust trading environment is expected to benefit the state treasury through securities transaction taxes.

Future Monitoring and Potential Reinstatement

With market mechanisms now functioning effectively, the NSF stated that there is no longer a need for its stabilization mission. However, the committee has committed to ongoing monitoring of both domestic and international economic and political developments. They indicated a willingness to reconvene should new risks emerge that threaten market stability.

The NSF, established in 2000 with a capital of NT$500 billion, was designed to buffer the local equity market against unexpected disruptions. The closure of its operations reflects policymakers’ growing assurance in Taiwan’s market resilience without external support.

Market analysts suggest that the NSF’s intervention played a crucial role in maintaining stability during turbulent times. As major technology companies prepare to announce strong earnings this year, driven by a surge in global demand for artificial intelligence hardware, the focus may now shift toward fostering broader market-driven growth in Taiwan’s economy.