Taiwan announces temporary short-selling curbs after US tariffs

Taipei: Taiwan's top financial regulator said on Sunday it will impose temporary curbs on short-selling of shares to help deal with potential market turmoil from US President Donald Trump's new import tariffs, and will take other steps as needed.

Taiwan's Financial Supervisory Commission said in a statement it would limit the number of shares that can be sold short and raise the minimum short-selling margin ratio to 130 per cent from 90 per cent, starting from Monday and lasting until Friday.

Short sellers borrow shares they expect to fall and hoping to repay the loan for less later to pocket the difference.

Taiwan's stock market was closed last Thursday and Friday for a holiday and reopens on Monday, meaning investors have yet to have a chance to respond to the tariffs. Global stock markets have plunged since they were unveiled, with the S&P 500 losing $5 trillion in two days.

The commission said that the tariffs were "bound to create a number of major uncertainties for the stability of Taiwan's capital market".

The commission added that it will continue to pay attention to the changes in the international financial situation and the status of the domestic capital market, and will adjust the measures "in a timely manner".

It did not elaborate.

Taiwan, a major producer of semiconductors which runs a large trade surplus with the United States, is subject to a 32 per cent tariff under the plans announced by Trump on Wednesday.

Separately, a source familiar with the situation told Reuters that Taiwan's central bank is confident it can maintain the stability of the Taiwan dollar's exchange rate when the market re-opens.

The Taiwan dollar is likely to face considerable depreciation pressure against the US dollar on Monday, traders said, given Taiwan stocks are expected to fall heavily and see an outflow of foreign capital.

"The central bank is confident that it has the ability to maintain the stability of the exchange rate," the source said, speaking on condition of anonymity given they were not authorised to speak to the media.

Taiwan has abundant foreign exchange reserves to help cushion the impact on the Taiwan dollar, the source added.

The Taiwan dollar has depreciated around 0.9 per cent against the greenback so far this year, while the benchmark stock index is down 7.5 per cent since the start of the year.