Taiwan slashes short-selling limit from 30% to 3% after market rout

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Taiwan slashes its short-selling cap

Taiex enters bear market after 9% intraday plunge

Taiwan’s Taiex plunged nearly 9% intraday on November 6, touching its lowest level since early October. According to TokenPost, the sharp selloff in AI-related stocks pushed the market into bear-market territory and prompted an emergency response from financial regulators.

The index recovered part of its losses by the close, finishing down 4.51% at 39,701.64 points. Even so, the Taiex lost 12.19% over the week, while its decline from the October peak reached 20.55%.

Concerns over the outlook for the AI industry were at the heart of the selloff. Following the U.S. midterm elections, investors began reassessing chipmakers and data-center equipment suppliers amid the risk of tighter regulation.

Taiwan slashes short-selling cap from 30% to 3%

In response to the market turmoil, Taiwan’s Financial Supervisory Commission (FSC) announced new restrictions on short selling that will take effect on November 9.

According to the Taipei Times, the maximum volume of intraday orders to sell borrowed shares will be reduced from 30% to 3% of a stock’s average daily trading volume over the previous 30 sessions.

The regulator will also raise the minimum margin requirement for short positions from 90% to 130%, effectively making such trades more expensive. In addition, the FSC encouraged publicly listed companies to consider stepping up share buybacks to help restore investor confidence.

The measures are designed to reduce the intensity of speculative selling, but they do not amount to a complete ban on short positions.

$15 billion fund offers support as AI sector risks persist

Alongside the trading restrictions, Taiwan’s government has authorized the use of its NT$500 billion National Financial Stabilization Fund, equivalent to roughly $15 billion.

According to an official Ministry of Finance statement issued on November 6, the fund’s management has been given authority to deploy capital as needed. No specific intervention size or timetable has yet been announced.

Traders Union previously examined how panic selling spread from Wall Street into Asian markets, with semiconductor producers including TSMC, Samsung Electronics and SK Hynix among the hardest hit.

Taiwan’s response is a direct attempt to contain that wave of selling. Government support may help ease short-term pressure, but the market’s longer-term stability will depend on how strongly potential U.S. restrictions affect AI infrastructure investment and demand for semiconductors.

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