TAIPEI - Taiwan may raise its COVID-19 alert level in the "coming days," Health Minister Chen Shih-chung said on Wednesday, warning of an extremely serious situation on the island which has so far controlled the pandemic well, sending the stock market tanking.
On Tuesday, Taiwan announced plans to restrict public gatherings as a result of a cluster of six new cases with no clear infection source, an unusual outbreak for the island that had kept a tight lid on community outbreaks.
Describing the situation as "very serious," Chen told parliament the level could be lifted a notch to three, limiting gatherings to five people indoors and 10 outdoors, as well as closing non-essential businesses.
"If there is the slightest failure in containment, then we will soon enter level three," Chen said.
The benchmark stock index fell more than 8% on worries over the new cases, though infections are still relatively few.
"If (the COVID-19 alert status) is raised to level three, a lot of businesses won't be able to operate, and at level four classes and offices will be closed," said Yeason Jung, an analyst at Capital Futures in Taiwan.
"There are short-term panic selling pressures emerging."
Taiwan Deputy Finance Minister Frank Juan said stock market and economic fundamentals are sound.
"Investors should remain calm and have confidence," he told Reuters.
But if the situation worsens, Juan said he did not rule out calling a meeting of the National Stabilization Fund, which the government can use to intervene in the stock market in case of large fluctuations.
The specter of restrictions affecting semiconductor production was enough to spook investors already nervous about selling pressure on tech shares, said Khoon Goh, head of Asia research at ANZ Bank.
"Cases are pretty low, but you can see we're in an environment now where investors are cautious," he said.
"Even though I doubt very much the restrictions will have an impact on export-orientated sectors, investors are playing it safe and that's contributed to the selloff."
Taiwan largely closed its borders early in the pandemic and has a robust contact tracing and quarantine system, keeping infections to 1,210, including 12 deaths, and allowing life to stay close to normal.
The government this week asked hospitals across Taiwan to allocate enough wards for potential new infections, Chen said, adding they are capable of providing 3,000 beds to treat patients.
President Tsai Ing-wen will hold a news conference on the coronavirus later on Wednesday, as will Chen.