Share prices closed sharply lower in nervous trade yesterday, dropping 3.16 percent with sentiment first hit by Wall Street's losses overnight, then dragged down further by a massive slump in Tokyo, dealers said.
They said the bellwether technology sector led the fall following a slide in Intel Corp in US after-hours trade after the semiconductor giant reported lower-than-expected results.
The TAIEX lost 212.12 points at 6,498.92, on turnover of NT$133.23 billion (US$4.15 billion).
Foreign institutional investors sold a net NT$15.07 billion in Taiwanese stocks as part of their profit-taking in the region.
Grand Cathay Investment Services Corp (大華投信) chairman Tu Jin-lung (杜金龍) said Wall Street and Intel triggered investor caution in early trade, which was fueled further by the slide in Tokyo shares and local political concerns.
Concerns over a Cabinet reshuffle and future direction of economic policies following Tuesday's announcement by Premier Frank Hsieh (
He said these negative leads hit the market at a time when it was going through a corrective phase following a 1,000 point gain in the weighted index since late October.
Investors also took a cautious approach ahead of the Lunar New Year holiday. The stock market will be closed from Jan. 26 to Feb. 2.
Tu said a further correction could not be ruled out, but liquidity-driven buying could limit the possible downturn.
"A typical pattern for a bull market is a gradual upturn while seeing quick downswings," he said.
Taiwan Semiconductor Manu-facturing Co (TSMC, 台積電), the world's largest made-to-order chip supplier, fell after Intel forecast first quarter sales that disappointed analysts.
Intel said fourth-quarter profit rose 16 percent to US$2.45 billion. Sales rose 6.3 percent to US$10.2 billion, falling short of its projection. The company forecast first-quarter sales of between US$9.1 billion and US$9.7 billion, which may miss the lowest analyst estimate of US$9.5 billion.
TSMC stock fell 4.6 percent to NT$61.60, its biggest decline since June 11, 2004.
Shares in United Microelectronics Corp (UMC, 聯電), the world's second-largest made-to-order chipmaker, fell 4.8 percent to NT$17.85.
"Intel's poor forecast has affected how investors view the industry," said George Wu (
"It's a bad beginning," he added.
Asustek Computer Inc (
Hon Hai Precision Industry Co (