TSMC challenges 2330, leading Taiwan stocks to soar past 40,000 points, and the ETF fund effect is starting to take hold

Taiwan’s weighted index broke through the 40,000-point threshold today, marking a historic market milestone. The key driver behind this index rally mainly came from TSMC (2330)—as the stock price broke above 2300 yuan—creating a boosting effect as it officially moved toward its stock code of 2330. In addition to the tangible contribution of global artificial intelligence demand to the semiconductor industry, the Taiwan Financial Supervisory Commission (FSC) formally implemented last Friday a new rule dubbed by the industry as the “TSMC clause,” easing the single-stock holding cap for actively managed funds and ETFs. This injects more liquidity into TSMC.

(The “TSMC clause” takes effect today; the 2330 share price reaches a new high of 2,180 yuan)

Demand for AI chips and TSMC’s technical moat advantage

TSMC (2330)’s share price reached a historical high of 2,310 yuan earlier this morning, driven by the technological barriers of the advanced process market. Tech giants are expanding capital expenditures in artificial intelligence infrastructure, leading to a structural increase in demand for high-performance computing chips. TSMC has secured most of the world’s AI chip orders through stable yields and advanced advanced packaging technology. This expansion in real revenue and profits provides solid fundamental support for corporate valuations, and is also the main catalyst driving the overall market higher.

Benefiting from a rebound in global end-market demand and the formation of the AI industry supply chain, Taiwan’s export orders have continued to hit historical highs for several months, providing strong revenue support and further boosting trading volume in the Taiwan stock market.

“The TSMC clause” and ETF passive buy orders

Passive buy orders from domestic ETFs play a key role in pushing the index higher. As TSMC’s market value expands, market attention on the “TSMC clause” has increased. TSMC’s weight in the Taiwan Stock Exchange Weighted Index is currently about 44.3%, meaning that the previous single-stock holding cap of 10% can no longer truly reflect the market’s “market-cap weighting.” Under the index compilation rules, market-cap ETFs must make passive add-ons as weight increases. Under the new “TSMC clause,” the proportion of holdings for funds will be raised from the current 10% to as high as 25%, with an expected benefit to 1.27 trillion yuan in funds. A well-known finance podcast, “Guoai,” recently estimated that combined with newly raised funds and existing scale, Taiwan’s ETF assets are expected to further drive mechanical buy orders of tens of thousands of shares of TSMC. With massive capital allocated by proportion into core heavyweights, it objectively creates a steady upward effect on the broader market.

This article “TSMC challenges 2330, leading Taiwan stocks to soar past 40,000 points; the ETF capital effect is starting to take hold” was first published on Lian News ABMedia.