The TAIEX suffers its biggest drop in more than a month

The TAIEX fell, led by United Microelectronics Corp (UMC, 聯電), after its US-traded shares plunged as the Nasdaq Composite Index had its biggest drop in two months on concern US companies used accounting tricks to inflate profits.

The TAIEX fell 169.48, or 2.9 percent, to 5692.18, its biggest decline in percentage terms since Jan. 11. Four stocks fell for every one that rose. The total value of trade yesterday was NT$96.9 billion (US$2.76 billion), a 19 percent drop from Tuesday's NT$119.9 billion.

The TAIEX, 65 percent of whose market value is made up of electronic stocks, and the Nasdaq, 50 percent of whose market value is composed of computer and telecommunication stocks, have had a correlation of 0.8 over the last six months. That indicates they move in tandem with each other 80 percent of the time.

Made-to-order chipmakers dropped after the PSI, a price-weighted index of 16 companies that design and make chips, fell 3.6 percent Tuesday.