Taiwan's benchmark TAIEX index jumped more than 5% on Monday, its biggest single-day gain since late July, after the government moved to halt a rout that had pushed the market into bear territory.

The index stood at 42,001.22 in midday trading, up 2,299.58 points or 5.79%, regaining the 42,000 level after falling 5,510 points last week. Morningstar reported the index up 6.1% at one stage, on track for its largest daily percentage gain since late July.

Chip giants lead the rebound

Semiconductor shares led the recovery. Taiwan Semiconductor Manufacturing Co. rose 6.6%, Foxconn Technology jumped 8.5% and MediaTek advanced 9.9%, according to Morningstar. Midday figures put TSMC up 5.85% at NT$2,260, MediaTek up 9.88% at NT$3,725 and Delta Electronics up 9.95%.

The rally ended a seven-session losing run, the longest since 2022. The TAIEX had tumbled more than 12% last week, its largest weekly loss since the week of 11 September 2001, after the Democrats' sweeping win in the US midterm elections raised concerns about a slowdown in data-centre spending.

Fund and short-selling curbs

The rebound followed coordinated action by Taiwan's authorities. The government authorised the National Financial Stabilization Fund, with NT$500 billion available to buy stocks, and the Financial Supervisory Commission cut the cap on intraday short-sale orders for borrowed shares to 3% of a stock's 30-day average daily volume, down from 30%, while raising the minimum margin for short sales to 130% from 90%.

The rally also had support from Wall Street, where the Philadelphia Semiconductor Index rose 4.21% on Friday and TSMC's US-listed shares gained 6.33%. TSMC reports October revenue on Tuesday, which will give investors a fresh read on demand.