After the weighted share price index fell through 5,500 points early last week, the government was expected to draw up a new defense line at 5,000 points.

Stocks continued their tumble, closing at 5,130 points Thursday and escaping another sliding session the following day, mainly because the market was closed for Taiwan’s National Day holiday.

Although officials had repeatedly called for calm an confidence, they remained edgy after the Dow Jones industrial average slumped to under 9,000 points during the week and closed at 8,451 before moving as low as 7,882 on the closing session of the week.

An estimated US$2 trillion evaporated in what investors described as “a worldwide market crash” on international stock markets in recent weeks, triggered by a deepening crisis of financial institutions in the U.S. and European nations.

Securities analysts said the latest market crash caught even the most experienced and savvy investors by surprise.

Officials here have become increasingly cautious after the market continued moving against them, with many openly asserting weeks earlier that the “investment value” for Taiwan shares already emerged.

Analysts said officials should not be blamed as even the US$700 billion financial rescue package adopted by the U.S. and the repeated call for confidence by President George W. Bush was ignored by investors.

They commended the steps already taken by the government here to cope with the unprecedented market developments. But more has to be done to shore up investor confidence, they asserted.

After Premier Liu Chao-shiuan announced the 100-percent guarantee for all deposits at financial institutions, as the Central Bank of the Republic of China (CBC) announced an emergency measure to reduce the nation’s key interest rate by quarter of a percentage point.

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