Taiwan shares closed at a two-month low on Wednesday, falling 3.57 percent, led by heavyweight exporters such as contract chip maker TSMC, after US stocks dropped overnight on lingering credit worries.
The main TAIEX share index ended down 317.95 points at 8,593.04, a closing level not seen since June 15. The index has shed about 12 percent since hitting a seven-year closing high on July 24.
"Investors are selling their shares to raise liquidity on concerns the US subprime crisis will trigger a further sell-off in global stocks," said Jordan Chen, chief investment officer of Invesco Taiwan, which oversees T$40 billion (US $1.2 billion). All sectors lost ground, with the electronics subindex down 3.71 percent and the financial subindex 3.65 percent lower.
Shares worth T$163.5 billion (US $4.95 billion) changed hands, up from T$142.7 billion the previous day. "We expect this correction due to the credit crisis to last at least until end of the month, and we'll continue to see recent overbought shares decline," said Cliff Chuang, a Mega Securities analyst.
Taiwan Semiconductor Manufacturing Co (TSMC) tracked losses in the US and other Asian markets, slipping 1.45 percent even after the company said it would establish chip packaging capabilities for the first time. Chip designer Mediatek Inc dived 5.08 percent on Wednesday as some analysts said its stock had been overbought. The shares have fallen nearly 20 percent from a closing high hit on August 3.
Banking shares suffered, with Cathay Financial Holding down 4.76 percent and Shin Kong Financial 4.83 percent lower. Bucking the declines was Compal Electronics Inc, the world's second-largest contract maker of notebook PCs.
Compal rose 0.59 percent after saying its second-quarter earnings nearly doubled from a year ago. The company, which counts top US notebook PC brands such as Dell and Hewlett-Packard among its major clients, also said it planned to invest US $30 million in Vietnam and expected to take a major stake in a magnesium alloy casing producer.
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