TSMC’s contract terms go into effect today, and the 2330 stock price hits a new high of 2180 yuan

TSMC (2330) saw its today’s share price touch 2,180 Taiwan dollars, a historical high, undeterred by yesterday’s U.S. stock market decline and geopolitical risks. The Financial Supervisory Commission (FSC) has officially implemented a new rule—known in the industry as the “TSMC clause”—that relaxes the single-stock holding cap for actively managed funds and ETFs. It raises the proportion of fund holdings from the current 10% to as high as 25%, and an estimated NT$1.27 trillion in funds are expected to benefit.

The FSC relaxes regulations; the TSMC clause takes effect immediately

The FSC announced that, effective immediately, it will loosen the cap on investments by Taiwan stock funds and actively managed ETFs in a single company’s stock, raising it from 10% of a fund’s net asset value to 25%. Securities firms call it the “TSMC clause” because, among more than 1,000 constituent stocks in Taiwan’s weighted index, only TSMC’s market-value weighting exceeds the 10% threshold.

This move is primarily driven by the expansion of Taiwan’s technology industry and changes in the structure of the capital market. Currently, TSMC accounts for about 44.3% of the weight in Taiwan’s weighted index, making the former 10% single-stock holding cap no longer able to truly reflect the market’s “market-cap weighting.” This regulatory loosening gives fund managers greater flexibility, enabling portfolios to better track economic fundamentals centered on semiconductors. At the same time, the FSC still sets an absolute cap of 25%, indicating that while regulators are allowing flexibility, they continue to balance it with preventing excessive concentration and systemic risk.

NT$1.27 trillion in funds will be loosened, injecting fresh liquidity into TSMC

The effective date of the new rules is expected to affect domestic stock funds and actively managed ETFs with total assets of more than NT$1.27 trillion. So-called “actively managed ETFs” refer to exchange-traded funds in which managers actively select stocks to target performance that exceeds that of the broader market. After lifting the holding ceiling from 10% to 25%, local institutional investors will have more room to allocate to TSMC, potentially providing momentum for individual stocks. However, this does not mean capital will immediately shift in full; the actual asset reallocation still depends on each securities investment trust company’s progress in amending fund contracts, as well as the managers’ professional judgment of fundamentals and valuation.

Last May, the FSC allowed passive ETFs to keep TSMC’s holding weight close to the benchmark. Now, with further loosening for Taiwan stock funds and actively managed ETFs, it effectively adjusts TSMC’s holding ceiling across the board, making the ETF and mutual-fund frameworks more consistent.

TSMC 2330 surges to 2,180 and hits a new historical high

With this tailwind, TSMC (2330) shares jumped more than 4% today, reaching a historical high of 2,180 Taiwan dollars, undeterred by yesterday’s U.S. stock decline and geopolitical risks.

This article, “The TSMC clause takes effect today; 2330 shares hit a new high at 2,180 yuan,” was first published on Linked News ABMedia.