Taiwan shares slumped 3.74 percent on Monday to a more than three-month closing low, paced by TSMC, after Taiwan's President ratcheted up talks of independence from China.
Adding to the woes, Asian stocks slumped on Monday with investors wary following a sell-off last week fuelled by the biggest drop in a decade for Chinese stocks which had fallen another 3.5 percent by mid-afternoon.
The main TAIEX share index closed down 285.59 points at 7,344.56, marking its biggest one-day percentage fall since June 8, when the market shed 4.25 percent. Today's closing level was the lowest since 7,309.69 hit on November 21.
Among the hardest hit, the electronics sub-index slumped 4.22 percent and the financial sub-index lost 3.43 percent. "This has been a really bad day for Taiwan shares. They are (being) hammered by President Chen's remarks and the continuing sell-off in Asian markets," said Kevin Yang, chief investment officer at Paradigm Asset Management, which oversees T$30 billion (US $912 million) of client assets.
The main index would continue sliding unless major markets such as the US, Japan and Hong Kong gain support from their recent plunges, said Tu Jin-lung, chairman of Gand Cathay Investment Services. President Chen Shui-bian said at a public appearance on Sunday that the island should pursue independence and change its official title, bringing a swift denunciation from its giant neighbour China.
Beijing, which regards Taiwan as a renegade province, has said it will take Taiwan by force if the island declares independence. Topping the list of the most active shares, Taiwan Semiconductor Manufacturing Co (TSMC), the world's top contract chip maker, sank 4.24 percent. Smaller rival United Microelectronics Corp (UMC) fell 4.11 percent. Hon Hai Precision, Taiwan's top electronics gear maker, dropped 5.63 percent.