Taipei-Taiwanese shares plunged more than 450 points Thursday on fears that the U.S. Federal Reserve could scale back its stimulus measures before the end of the year, according to market observers.

The weighted index, the key barometer for the main board, opened lower and tumbled 450.87 points, or 2.68 percent, to finish at 16,375.4, the lowest level in recent sessions, with both traditional and hi-tech stocks suffering significant losses.

Turnover totaled NT$431.276 billion (US$15.4 billion).

However, the release of the minutes of the Fed’s July meeting on Wednesday, which suggested a possible end to stimulus measures this year, and COVID-19 implications were not the only factors at work.

The continued global chip shortage and the overnight fall of the PHLX Semiconductor Index below its quarterly moving average also contributed to the plunge on the local bourse, analysts said.

Shares in Japan, South Korea and Hong Kong also dropped on Thursday.

Liu Kun-hsi (???), chairman of Shin Kong Investment Trust, indicated that the potential withdrawal of the Fed’s huge financial support by the end of the year was one of the major reasons.

Analyst Richard Wang (???) said electronics equities, the mainstay of the domestic stock market, lost 2.75 percent — on par with the fall suffered by the main board — an indication investor confidence in the sector and the main board is being largely eroded.

The severe shortage of chips has also resulted in lower sales of some components and reduced inventories, Wang said.

With the weighted index ending below 16,400 points on Thursday, the local stock market shed NT$1.37 trillion in capitalization.

Foreign institutional investors engaged in net sales of NT$50.147 billion in Taiwanese stocks — the sixth highest level on record.

Alex Huang (???), an analyst with Mega International Investment Services Corp., said the Fed’s indication it could rein in stimulus measures as soon as this year pushed up the U.S. dollar and caused stock markets in Taiwan, Japan and South Korea to fall.

Huang forecast foreign institutional investors will continue to allocate capital based on the stronger U.S. dollar and that will impact the Taiwan stock market.

The performance of the greenback will serve as a key indicator for future developments on the Taiex, he said.

Source: Focus Taiwan News Channel