As international instability from new Trump tariff policies cause Taiwan stocks to slide, Professor Lee Torng-her from National Dong Hwa University explains how government intervention aims to prevent panic and potential market ripples.
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00:00To start with, what is the government attempting to achieve with this intervention and the stock market?
00:06Okay, so this is not the first time for the government to intervene in the stock market, okay?
00:12I think the primary purpose for this intervention is kind of like to prevent the stock market from panic, okay?
00:22So we all know, you know, stock market is kind of like a frontrunner for the economy, okay?
00:27And particularly in Taiwan stock market, retail investors still count a lot.
00:35So the government wants to use this, what we call the National Financial Stability Funds to kind of like stabilize the financial market to calm the market and also boost investors' confidence in the economy.
00:54So what is the government worried about when it comes to the downstream effects of international instability that has followed these tariff policies?
01:02Okay, so definitely this is going to affect a lot of small and medium businesses.
01:08And so in the worst case, probably will cause some firm, maybe they cannot survive if there's a 32% tariff, so like permanent.
01:23Okay, so I guess that's why this is make people, particularly investors, pretty edgy about these tariff policies from the Trump administration.
01:36Earlier, you mentioned retail investors.
01:39What are the specific risks with a market slide when it comes to this group of investors?
01:45I think it's because a lot of people, particularly retail investors, do not have the kind of risk awareness.
01:56So they, generally speaking, put too much money into the stock market, especially when the market was good.
02:05And so some of them, maybe they borrow money to invest in the stocks.
02:12So I guess this is what caused a lot of a ripple effect because once their income has been reduced, once their wealth has been reduced, of course, some of them are paper wealth, right?
02:24But this is definitely will have a ripple effect.
02:29This is going to deter their spendings and some of them may be, you know, so they use their home as a mortgage, as a collateral to borrow money to invest in stock.
02:43So, and this is maybe the ripple effect will continue if this continues and it will kind of like affect the housing market and also other markets.