Taiwan has announced emergency measures to stabilise its stock market after a sharp global selloff in artificial intelligence stocks pushed its benchmark Taiex into a bear market. 

The index fell as much as 9% on Friday, 06 November 2026, before recovering some losses. It still recorded its worst weekly performance since 2001. The selloff reflects growing concerns about the future of AI investments, particularly whether the massive spending on data centres, chips and related infrastructure will generate enough returns.

Taiwan’s Financial Supervisory Commission has decided to tighten short selling rules from 09 November 2026. It will reduce the permitted volume of intraday short selling orders to 3% of a stock’s average daily trading volume over the previous 30 days, compared with the earlier limit of 30%.

The regulator will also increase the minimum margin requirement for short selling from 90% to 130%.

Separately, the Finance Ministry said it was prepared to deploy its NT$500 billion, or approximately $15 billion, stock stabilisation fund to support the market if required.

Taiwan’s economy and stock market have benefited significantly from the global AI boom. Companies such as Taiwan Semiconductor Manufacturing Company (TSMC), a major supplier of advanced chips, have gained from rising demand for AI hardware.

However, concerns about possible tighter US regulation of AI and delays in data centre expansion have triggered investors to reduce exposure to technology stocks. Doubts about whether companies can recover their huge AI investments have added to the selling pressure.

Foreign investors have also been withdrawing money from Taiwan’s market, with net selling exceeding $45 billion during the current quarter.

The latest intervention shows how seriously Taiwan’s authorities view the impact of the AI selloff. Market stability will now depend on global technology sentiment, foreign investment flows and confidence in future AI demand.

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