The FSC was forced to take these countermeasures as the weighted share price index of the local bourse plunged as many as 738 points during the five trading sessions of last week to close at 6307.28.

Since President Ma Ying-jeou took office on May 20, the share price index had nosedived 2,900 points or 33 percent, with the market values shrinking by NT$7 trillion. This represented the second largest fall of its kind in the world, next only to the drop in China's stock market, directing showers of complaints from investors on the government's poor ability to revive the local bourse and economy.

In response, the FSC invited representatives from securities, futures, banking and insurance sectors to seek effective countermeasures at a meeting held last Friday afternoon.

Most participants in the meeting shared the view that the confidence of investors in the local bourse has been seriously undermined by unfavorable factors at home and abroad. They came out with several countermeasures, and most of them have been adopted by the FSC.

For instance, financial holding firms will be allowed to launch treasury shares as long as their capital adequacy ratio reaches 105 percent, down from the existing requirement of 110 percent. This will help bring to 12 from 5 the number of financial holding firms eligible to purchase their own treasury shares, so the bourse can recieve injections of more investment funds.

In addition, the FSC will join forces with Taiwan Stock Exchange Corp. and Over-the-Counter Securities Market to set up an ad hoc task force to push blue chips listed on the TAIEX and OTC markets to launch a treasury shares system, encouraging boards of directors and supervisors to purchase shares of their own companies.

Furthermore, the FSC will encourage the securities investment and trust firms to issue stock-based mutual funds for investment in the local bourse, and it will also encourage domestic banks to utilize part of their operating funds to buy stocks.

FSC officials said the entire banking system in Taiwan is still in a position to funnel NT$320 billion into the local bourse, and even if half of the figure is poured into the market, the market can witness an addition of NT$160 billion investment funds.

One more effective measure is for the Taiwan Stock Exchange Corp. and the OTC market to publicize the good economic fundamentals and the bright economic prospects in 2009 to effectively boost the confidence of investors in the domestic bourse.



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