The local bourse slid slightly yesterday on profit-taking by investors, and it may continue to fall today because of a downturn on Wall Street, analysts said.
The benchmark TAIEX lost 6.31 points yesterday, or 0.09 percent, to close at 7,178.34 on turnover of NT$103.23 billion (US$3.14 billion).
But the loss may widen, especially after US stock-index futures fell after the Democrats won a majority in the House of Representatives, ending 12 years of Republican control.
The divided government and possible tax hikes brought by a Democrat-controlled Congress concerned US investors.
Standard & Poor's 500 Index futures expiring in December lost 0.4 percent to 1,383.40 as of 7:11pm. Dow Jones Industrial Average futures dropped 0.28 percent to 12,154 and NASDAQ-100 Index futures fell 0.4 percent to 1,744.75.
"The local bourse is strongly tied to Wall Street, so I think the Taiwan market is unavoidably being affected," said Mike Chow (周道中), an analyst at Yuanta Core Pacific Securities Co (元大京華證券).
If shares in the US decline, especially those listed on the tech-weighted NASDAQ Stock Market, foreign investors tend to sell local stocks the following day, Chow said.
But the effect will not linger for long, he said. As the Christmas shopping season draws near, the market will be back to fundamentals, Chow said.
Foreign investors bought a net NT$1.51 billion yesterday, according to Taiwan Stock Exchange statistics.
Regardless of the political uncertainty followed by the indictment of President Chen Shui-bian's (陳水扁) wife, Wu Shu-jen (吳淑珍) on embezzlement, forgery and perjury charges, foreign investors have bought a net NT$19.13 billion over the past week, the stock exchange said.
Construction stocks led gains with 11.54 percent growth.
Increased sales of DRAM and packaged ICs will boost electronics stocks in the near future, analysts said.