Taiwan shares ended down 1.28 percent at a three-day closing low on Monday, tracking losses on Wall Street as Shin Kong Financial led financial shares lower after saying it was exposed to the US subprime market. The main TAIEX share index dropped 116.09 points to 8,941.73, extending its slide from a seven-year closing high on July 24 to more than 8 percent.
The banking and insurance subindex fell 1.37 percent, pulled lower by Shin Kong and rival Cathay Financial. Turnover shrank sharply to T$124.8 billion (US $3.8 billion) from T$172.1 billion in the previous session. "Foreign investors have been huge net sellers of Taiwan shares in the past two weeks or so, amid concerns the US subprime crisis would escalate," said Victor Liu, an assistant vice president of Prudential Financial with T$100 billion in client assets.
"Investors will watch closely if foreign investors continue to pull out of the market," said the fund manager, adding that the TAIEX would stabilise at 8,700 points, a technical support level.
Shin Kong, which runs Taiwan's No 2 life insurer, slumped 3.08 percent after saying late on Friday that about one-third of its T$10.53 billion in asset-backed securities (ABS) holdings were related to US subprime products.
Among the market's 10 most active issues by turnover, rival Cathay was off 1.49 percent. Smaller player Taiwan Life Insurance ended 3.06 percent lower. On Friday, US stocks fell sharply on fears that mortgage losses would intensify. The heavily weighted electronics subindex dropped 1.61 percent, weighed down by a 2.73 percent slide in Advanced Semiconductor Engineering Inc (ASE).
ASE, the world's top chip packaging house, posted a decline in quarterly profit on Friday. Taiwan's DRAM shares rose on hopes they would benefit after bigger rival Samsung Electronics shut down six of its chip production lines on Friday. Powerchip jumped 4.32 percent and ProMOS Technology rose 0.4 percent.
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