Taiwan's financial regulator says no extreme measures needed to stabilise stock market

TAIPEI Taiwan will not take extreme measures to stabilise the falling stock market unless it is necessary, the head of the island's financial regulators said on Monday.

Taiwan's benchmark stock index is down 27 per cent this year, hurt by fears over global inflation and soaring U.S. interest rates. It was down 0.9 per cent on Monday.

A move on Friday to raise the cost of shorting stocks was intended to stabilise the market and increase investor confidence, according to Thomas Huang, head of the Financial Supervisory Commission.

Measures to increase the cost of short selling have been effective in the past. He said that Taiwan's stocks are still falling, so we need to watch this for a while.

The government won't take extreme measures unless it's necessary, Huang said.

He said that U.S. interest rate increases were likely to continue, driving down the market as it sucks foreign capital out of Taiwan.

The U.S. rate rises have enormous suction power, which is why the market falls, and that is the main reason for this wave, Huang said.

He said that the widening of the interest rate spread between Taiwan and the United States is one of the reasons for foreign capital outflows.

But foreign investors will pay attention to the fundamentals of Taiwanese stocks, Huang said.