US investors pay biggest premium for TSMC shares in two months

TAIWAN Semiconductor Manufacturing Company’s (TSMC) US-listed shares cost almost 25 per cent more than those in its domestic market at the end of last week, a sign that global investors are still willing to pay up for stocks that can benefit from the artificial intelligence boom.

The chipmaker’s American depositary receipts (ADRs) have long traded at a premium to its Taipei-listed equities, due to a mix of easier access for foreign investors and inclusion in popular indexes. But the 24.6 per cent premium at Friday’s (Dec 20) close was the highest since Oct 17 and well above the daily average of 19 per cent for this quarter, according to data compiled by Bloomberg.

The premium ballooned due to the differing fortunes of the Taipei- and New York-listed stocks on Friday. The company’s local shares closed down around 3.3 per cent, after a nervous trading session across much of Asia. But by the time New York trading opened, the mood had improved, pulling an index of semiconductor stocks higher. TSMC’s US shares ended the day around 1.3 per cent higher.

TSMC’s local shares rose as much as 4.4 per cent during Monday morning, reducing the premium to below 20 per cent – at least until US investors start trading.

The ADRs are included in gauges such as the Philadelphia Stock Exchange Semiconductor Index and in exchange-traded products such as the VanEck Semiconductor ETF and iShares Semiconductor ETF, meaning that funds tracking them must buy the US-listed securities. BLOOMBERG