Taiwan Semiconductor Manufacturing Co. (TSMC) has seen its US-listed shares trading at nearly a 25% premium over its Taipei-listed counterparts as of last week, signaling strong interest from global investors keen on riding the AI-driven market surge.
The American depositary receipts (ADRs) of TSMC have traditionally commanded a higher price than its shares in Taiwan, primarily due to easier access for international investors and inclusion in major indices. However, last Friday’s 24.6% premium was the largest since October 17, significantly exceeding this quarter’s average of 19%, based on Bloomberg data.
The disparity widened as TSMC’s shares experienced differing trends in their respective markets. On Friday, the Taipei-listed shares dropped 3.3%, mirroring a cautious trading session across Asia. By contrast, investor sentiment improved by the time US markets opened, boosting semiconductor stocks and pushing TSMC’s ADRs up by 1.3%.
By Monday morning, TSMC’s local shares rallied up to 4.4%, narrowing the premium to under 20%. However, this may shift once US trading resumes.
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TSMC’s ADRs are integral to popular benchmarks like the Philadelphia Semiconductor Index and are part of major ETFs such as the VanEck Semiconductor ETF and iShares Semiconductor ETF. These inclusions compel funds tracking these indices to purchase US-listed shares, driving demand for the ADRs.
For more, see: Popular Arbitrage Trade Backfires as TSMC Frenzy Grows in US.
