The popular Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) arbitrage trade might soon see a change in dynamics that could affect the trading of the US listing versus the local one. And for anyone who wants to monetize the elevated premium, Goldman Sachs Group Inc highlights potential trades.
A note from the bank’s sales desk published on Friday said that demand for TSMC’s Taipei-traded stock could rise as Taiwan’s regulator is considering an amendment to local exchange-traded funds’ (ETFs) ownership.
The changes, which could come in the first half of this year, could push up the current 30 percent single-stock weight limit and affect allocations to the shares. As a result, the spread between the two listings could narrow.
Photo: CNA
“This presents an interesting opportunity for investors to monetize the premium in the [American depository receipts] ADR,” it said.
Existing holders of TSMC’s ADRs could do so by switching into the local stock. Those interested in capturing the narrowing spread could buy the local shares while shorting the US listing, Goldman Sachs said.
The enthusiasm for artificial intelligence in the US since the rise of ChatGPT has pushed the premium of TSMC’s ADRs over the local listing to its highest average this quarter since 2002. As of Friday, the US shares’ premium was near 19 percent, compared with about 10 percent for the five-year average.
Risks related to US President Donald Trump’s tariff policy and a potential partnership with Intel Corp could lead to more volatility and profit taking on TSMC’s ADRs, Goldman Sachs added.
The US-traded shares have gained almost 140 percent since the release of ChatGPT, more than the 123 percent increase in the local listing through Friday and far beating the 82 percent rise in a global gauge of semiconductors.
TSMC fell 1.83 percent to close at NT$1,075 in Taipei trading yesterday.
“Selling of TSMC came as many investors were still worried that the Trump administration’s trade war will pressure the chipmaker to invest more in the US,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said.
Additional reporting by CNA
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
CHIP BOOM: Revenue for the semiconductor industry is set to reach US$1 trillion by 2032, opening up opportunities for the chip pacakging and testing company, it said ASE Technology Holding Co (日月光投控), the world’s largest provider of outsourced semiconductor assembly and test (OSAT) services, yesterday launched a new advanced manufacturing facility in Penang, Malaysia, aiming to meet growing demand for emerging technologies such as generative artificial intelligence (AI) applications. The US$300 million facility is a critical step in expanding ASE’s global footprint, offering an alternative for customers from the US, Europe, Japan, South Korea and China to assemble and test chips outside of Taiwan amid efforts to diversify supply chains. The plant, the company’s fifth in Malaysia, is part of a strategic expansion plan that would more than triple
Taiwanese artificial intelligence (AI) server makers are expected to make major investments in Texas in May after US President Donald Trump’s first 100 days in office and amid his rising tariff threats, Taiwan Electrical and Electronic Manufacturers’ Association (TEEMA, 台灣電子電機公會) chairman Richard Lee (李詩欽) said yesterday. The association led a delegation of seven AI server manufacturers to Washington, as well as the US states of California, Texas and New Mexico, to discuss land and tax issues, as Taiwanese firms speed up their production plans in the US with many of them seeing Texas as their top option for investment, Lee said. The
RSS