TAIPEI (Reuters) - Taiwan President Tsai Ing-wen said on Friday that market fundamentals were sound and there was no need for “excessive panic”, after the island’s bourse at one point plunged more than 7% amid global alarm over the coronavirus pandemic.
Taiwan’s main index skidded in morning trading to its lowest in more than a year, echoing slumps in financial markets around the world. However they pared earlier losses to close down 2.8% to a 11-month low.
On her Facebook page, Tsai said Taiwan’s trade-reliant economy remained sound, exports continued to grow and its virus control work was well in hand.
Aside from a $2 billion stimulus package, the government was pushing ahead with other steps to revive the economy, which would support the stock market, she added.
“Taiwan stock market fundamentals are good,” Tsai said. “(I) hope investors can keep their confidence and have no need for excessive panic.”
The Finance Ministry, Central Bank and other departments are paying close attention to movements on the international markets, and will “react immediately” if the time comes to maintain stability in the foreign exchange market and momentum in the stock market, she added.
Taiwan’s state-backed banks bought stocks on Friday at the government’s request to support the market, three sources with direct knowledge told Reuters, speaking on condition of anonymity.
A government fund also bought stocks, said a separate source with direct knowledge of the purchases.
It was unclear how many stocks they bought. The Finance Ministry declined to comment.
Tsai said on Thursday another $1.33 billion was available to stimulate the island’s economy on top of the previous $2 billion package, after the central bank warned the coronavirus epidemic will have a longer impact than previously thought.
Taiwan also has a National Stabilisation Fund it can activate to intervene in the stock market if needed.
Taiwan is ready to use that to ensure market stability, its finance minister said earlier on Friday before the market opened.
Finance Minister Su Jain-rong told reporters in Taipei minutes before the stock market opened that the fund “is prepared for battle at any time” and has already drawn up a strategy to protect the markets.
Su urged investors not to be unduly pessimistic about short-term global market volatility and “not to panic”.
Taiwan has reported only 50 cases of the virus, versus more than 80,000 in China, but it has ramped up containment efforts, suspended visits to the island for most Chinese visitors and severely limited flights to China, including Hong Kong and Macau.
Taiwan, a key part of the global technology supply chain whose largest trading partner is China, had already cut its estimate for 2020 economic growth to 2.37% last month, citing the threat from the outbreak to its export-dependent economy.
Reporting by Emily Chan and Liang-sa Loh; Additional reporting by Yimou Lee; Writing by Ben Blanchard; Editing by Himani Sarkar and Christian Schmollinger