Affected by Wall Street's overnight losses, the local bourse yesterday recorded its biggest plunge in more than three years with several bellwether stocks tumbling to their daily limit.
The benchmark TAIEX nose-dived 404.14 points, or 4.22 percent, to 9,162.28 on turnover of NT$295.54 billion (US$8.99 billion).
This was the steepest slide since March 22, 2004, when the market tumbled 455.17 points as nervous investors dumped shares in the wake of political uncertainty after the presidential election.
Yesterday also marked the biggest fluctuation among global benchmarks.
The fall in the domestic market was triggered by foreign investors' selloff, with net sales reaching a record NT$62.4 billion.
The drop wiped out US$32.5 billion in market value yesterday, Taiwan Stock Exchange data showed. About five stocks fell for every one that gained.
"Foreign investors' moves often match US stock markets' ups and downs. Their selloff [yesterday] dented local investors' confidence," Huang Shin-hui (黃熏輝), an analyst at Capital Securities Corp (群益證券) told the Taipei Times by telephone.
Taiwan Semiconductor Manu-facturing Co (TSMC,
TSMC's shares lost 6.2 percent to close at NT$64 on the Taiwan Stock Exchange yesterday. Its American Depositary Receipts (ADR) also dropped 6 percent overnight.
Hon Hai Precision Industry Co (鴻海精密), the nation's biggest electronics firm, also posted its biggest slide since June last year. Its shares fell 6.1 percent to NT$263.5.
Previous outperformers, including solar energy and property stocks, fell by their 7 percent daily limit, dealing a further blow to investor confidence in mid-day trading, Huang said.
He suggested that investors turn to China-concept stocks, passive components and LED-related shares.
The TAIEX dropped 4.4 percent this week -- its first weekly decline in 11 weeks -- paring its gain this year to 17 percent compared with a 9.9 percent gain in the Morgan Stanley Capital International Asia-Pacific Index.
"Crumbling global equity markets are hurting investor confidence,'' said Andrew Wang, who helps manage US$2.9 billion at Prudential Financial Securities Investment Trust Enterprise (保德信投信).
"This isn't the end of the bull market, though it must feel like that for some panicky investors," he said in Taipei.
Some analysts say the correction may be a good opportunity for bottom fishing in preparation for the index's recovery and anticipated surge past the 10,000 mark ahead of next year's presidential election.
"Following Friday's big fall, we think it will take longer -- one to two months when corporate financial reports are released -- before the index bounces back," Huang said.
Additional reporting by Bloomberg
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