Markets in Asia and Europe slumped yesterday, tracking losses on Wall Street overnight as investors worried about a possible end to US interest rate cuts and a slowing US economy.
In Taiwan, benchmark TAIEX dropped 325.1 points, or 3.4 percent, to 9,273.1 points, its lowest since the third week of September.
Hong Kong's benchmark index plunged over 3 percent and markets in Japan, China, South Korea and Singapore fell more than 2 percent.
Andrew Teng (鄧安瀾) of Taiwan International Securities Corp (金鼎證券) said investors overreacted to the Wall Street slump.
"The market decline isn't surprising because of Wall Street losses overnight, but the sell-off was a bit overdone," he said.
Repeating a pattern seen several times this year, a sharp sell-off in US stocks prompted investors to dump shares in Asian markets, many of which have surged to records in recent weeks.
The Dow Jones industrial average tumbled more than 360 points on Thursday as investors reacted nervously to surging oil prices and a US Federal Reserve warning on inflation.
The warning from the Fed, which cut interest rates earlier this week, triggered concern that it might hold off on further cuts or consider raising them if inflation accelerates.
"I'm not expecting a serious sell-off, but I think Asian markets are responding to a genuine [fact] in the overall outlook -- that the Fed is not going to be as aggressive in cutting rates," said Tim Rocks, Asia Strategist at Macquarie Bank in Hong Kong.
Japan's benchmark Nikkei 225 index tumbled 352.92 points, or 2.1 percent, to finish at 16,517.48 points, dragged down by financial shares. Mitsubishi UFJ Financial Group dropped 6 percent following a recent revision of its profit outlook on weak domestic lending, while Mizuho Financial Group fell 5.7 percent.
In Hong Kong, the blue chip Hang Seng Index sank 1,024.54 points, or 3.25 percent, to close at 30,468.34. The index is still up 52.6 percent this year.
Hong Kong's stock market has surged amid investor demand for shares in mainland Chinese companies and on signs that Beijing plans to allow individual investors from the mainland to buy shares in Hong Kong stocks.
The stunning ascent this year in many Asian markets has been punctuated by occasional drops, usually sparked by plunges on Wall Street.
So far this year, each time Asian markets have dropped sharply, nearly all have quickly bounced back and climbed higher.
Elsewhere, the benchmark Shanghai Composite Index fell 2.3 percent, or 136.47 points, although there the market was driven by concerns that authorities would raise interest rates to cool China's booming growth.
Singapore's Straits Times index was down 2.1 percent to 3,722, while the Korea Composite Stock Price Index, or Kospi, fell 2.1 percent to close at 2,019.34.
European stocks also fell in early trade yesterday, with Britain's FTSE 100 down 1 percent, and Germany's DAX down 0.8 percent.
Also see: Oil prices up, stocks down