Taiwan Stocks Heat Up, Fueling Borrowing Spree; Central Bank to Monitor Margin Trading Leverage

(CNA) TAIPEI, July 8 (CNA) -- Robust trading on the Taiwan stock market has led to increased borrowing by individuals to invest, raising concerns about financial stability. The Central Bank stated it will closely monitor changes in stock market margin trading leverage and the flow of bank funds into the stock market, urging banks to be mindful of related credit expansion and risk control.

The Central Bank is scheduled to deliver a special report to the Legislative Yuan's Finance Committee on July 9 regarding "Central Bank's Mid-to-Long-Term Response Strategies and Policy Tools Amidst Multiple Risks in Stocks, Inflation, Exchange Rates, and Real Estate." A written report was released today.

The Central Bank explained that since the beginning of the year, global tech giants have continued to expand AI capital expenditures, benefiting Taiwan's related supply chains. Investors are optimistic about the prospects of the Taiwan stock market, which rose to 45,479 points as of July 7, an increase of 57% from the end of 2025. The average daily trading value of listed and OTC stocks also surged significantly to NT$1.4418 trillion in July of this year (July 1 to July 7), an increase of 133% from the end of last year.

The Central Bank further pointed out that the active trading in the Taiwan stock market has attracted individuals to actively borrow funds from banks and securities firms to increase their investment scale and magnify returns. This has led to a notable increase in bank loans for personal financial management and revolving funds, as well as a significant growth in the total balance of funds lent by securities firms to clients. Additionally, the outstanding balance of bank loans to the securities and futures industry and financial auxiliary industries continues to climb.

According to the domestic regulatory framework, the Financial Supervisory Commission (FSC) is responsible for overseeing the capital markets and individual financial institutions. The FSC recently stated that it is closely monitoring the aforementioned phenomena. In addition to having a two-way risk control mechanism for the sources and uses of funds for securities firms, it also continuously monitors risk indicators such as loan amounts and non-performing loan ratios for banks' lending businesses, including wealth management mortgages, stock-backed loans, and personal loans.

The Central Bank stated that it will closely monitor changes in stock market margin trading leverage and the flow of bank funds into the stock market. Banks, on the other hand, should be mindful of related credit expansion and risk control. (Editor: Lin Chia-han) 1150708

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