TAIPEI: Taiwan's benchmark stock index fell a seventh day, the longest losing streak since August 2005, on concern the mainland's tightening monetary policy will curb investment from the mainland.

The Taiex Index slumped 3.5 percent to 7,598.81, the most since July 13 and the world's biggest decliner. Acer Inc, the world's second-largest computer vendor, lost 3.8 percent to NT$90.40, its lowest point since December 18. United Microelectronics Corp, the world's second-largest custom chip-maker, slid 5.2 percent to NT$16.50.

The island's benchmark index has slipped 9.1 percent from the high on Jan. 15 amid indications the mainland will ease measures that shielded its economy from last year's global recession. Hong Kong's Hang Seng Index yesterday dropped more than 10 percent, the threshold that defines a so-called correction, from its peak on November 16, after Beijing mandated higher loan reserves at banks.

"There is panic selling by everyone," Michael Lin, a trader at Fubon Securities Co in Taipei, said in an e-mail. "Taiwan is the only market in Greater China without an afternoon session. People expect the mainland to slide further, so they just close their eyes and sell first."

The MSCI China Index yesterday fell more than 10 percent from last year's high in November, dragging the country's stocks into a so-called correction, on concern government measures to curb lending will derail growth.

Concerns about tighter monetary policy on the mainland have dragged the MSCI World Index down for the past five days.

"We've pared back our overweight on Taiwan in the last two weeks," Caroline Maurer, co-manager of the Henderson Horizon China Fund, told reporters in Singapore. "Valuations are looking quite expensive," she explained.

China Daily/Bloomberg News

(HK Edition 01/27/2010 page2)