Taiwan stocks dropped 1.32 percent on Monday to end at the lowest close in nearly 3 months on weak US markets and fears of unwelcome surprises when listed firms report fourth quarter earnings this week and next. The TAIEX share index ended the day with a loss of 77.43 points to 5,771.48 for its lowest close since November 3.
Firms with big long-term investments, like CMC Magnetics, and companies that made big capital investments at the height of the last tech boom, such as Advanced Semiconductor Engineering (CMC), were punished by investors.
"Right now we don't even know how much will be deducted from fourth-quarter earnings, that is the scary thing," said Alvin Teng, assistant research manager at SinoPac Securities.
"With US stocks going lower, there's no hope of a rebound without foreign investors," Teng added.
The market is worried such companies may post large charges from the new accounting rules that require re-evaluation of assets at market prices, said analysts.
Analysts said that with few firms reporting results so far, investors have little idea of how much may be written off, and had opted to play it safe, especially with market confidence low amid losses in US share markets.
CMC, Taiwan's largest compact disc maker, tumbled 5.96 percent to T$13.40, while top microchip packaging firm ASE tumbled the seven percent daily trading limit to T$20.40.
AU Optronics, the world's third largest display screen maker, was the day's most active issue and reversed early gains to fall 3.3 percent and close at T$44.00.
Electronics were far from the only sector to be hit by worries over earnings surprises, with all sectors ending lower. Mega Financial Holdings, Taiwan's second-largest financial firm, fell 2.42 percent to end at T$20.20.
Turnover reflected the market's cautious mood, remaining sluggish at T$47.13 billion after Friday's T$46.08 billion.
Petrochemical shares managed to hold steady after crude prices rose more than $1 per barrel in US trade on Friday. Oil refiner Formosa Petrochemical closed unchanged at T$58.50.
The over-the-counter market's TAISDAQ index fell 1.45 points, or 1.32 percent, to close at 108.80, while February TAIEX futures lost 64 points, or 1.09 percent, to close at 5,805.