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Taiwan’s Finance Ministry warns of crash as stock market reopens amid Evergrande crisis
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TAIPEI (Taiwan News) — The Ministry of Finance says it is closely monitoring the market for signs of severe volatility in share prices as the country’s stock market opens on Tuesday (Sept. 22) after a four-day Mid-Autumn Festival holiday.
The imminent collapse of the Evergrande Group sent shivers through markets around the world while Taiex remained closed over the long weekend, according to a UDN report.
Investors panicked at reports on Sunday (Sept. 20) that the default from China’s largest property developer will spread to other industries throughout the Chinese economy, with the Dow Jones, S&P 500, and Nasdaq index falling 1.8%, 1.7%, and 2.2% respectively.
Despite this, Hong Kong stocks stabilized on Monday (Sept. 21) following news the growing crisis would not be a repeat of Lehman Brothers default that triggered the 2008 global financial crisis.
Ministry of Finance officials say they may take appropriate preventive measures to shield Taiwan from turbulence emanating from global markets and are constantly monitoring the situation, per UDN. If the market goes into freefall, officials will consider activating the National Stabilization Fund as a last resort.
First created in 2000, the fund is an emergency measure designed to buoy Taiex in times of crisis.
The heads of Taiwan’s joint public bank said that while Taiwan’s stock market is based on stable economic fundamentals, global markets are interlinked, which inevitably leads to short-term fluctuations. Assessments will not merely be based upon volatility over a couple of days of trading but on long-term indicators, per UDN.