Taiwan’s stock market has reached an all-time high, propelled by the surge in Taiwanese technology stocks, including TSMC, amid the global semiconductor boom. The narrowing gap in market capitalization with the domestic stock market has narrowed to approximately US$4 billion.
According to the Taiwan Stock Exchange on March 21, the Taiwan Capitalization Weighted Stock Index (TAIEX) closed at 20,199.09, up 2.10 percent from the previous trading day. Successfully surpassing the 20,000 mark for the first time in history based on closing prices, the TAIEX has risen by 12.65 percent since the beginning of the year and 31.00 percent compared to a year ago.
The rally in the Taiwanese stock market is being led by TSMC, the world’s top global foundry, which specializes in semiconductor outsourcing. As the semiconductor sector emerges as a beneficiary of the global artificial intelligence (AI) boom, TSMC’s stock price is also gaining momentum.
On March 21, TSMC’s stock closed at TW$784 (32,645 won and US$24.57), marking a 3.43 percent increase. It has surged by 47.09 percent since the beginning of this year.
On the same day, the upward trend continued for other top technology stocks in terms of market capitalization, in addition to TSMC. Foxconn, the second-largest company by market capitalization in Taiwan and the manufacturer of iPhones, saw its stock price rise by 3.25 percent. Similarly, the stock prices of MediaTek, a semiconductor fabless company with the third largest market capitalization, and Quanta Computer, a MacBook manufacturer with the fourth largest market capitalization, also increased by 3.26 percent and 2.21 percent, respectively.
The Taiwan stock market is rapidly narrowing the gap with the South Korean stock market. As of this day, the market capitalization of listed companies in Taiwan stood at US$2.0175 trillion, closely trailing the combined market capitalization of KOSPI and KOSDAQ listed companies at US$2.0215 trillion. Recently, the domestic stock market has seen a significant rebound, but the upward trend of the Taiwan stock market has been even more pronounced. As of the end of last year, the price-to-earnings ratio (PER) of the Taiwan stock market stood at 21.12 times, which is already higher than the PER of the KOSPI, standing at 19.36 times.
There is also an analysis suggesting that the market capitalization rankings of Taiwan and South Korea could soon reverse. This follows Taiwan’s financial authorities announcing plans to regulate the price-to-book ratio (PBR) of listed companies. Last month, Lin Xiuming, the chairman of the Taiwan Stock Exchange, stated, “To activate the capital market, we will ensure that listed companies manage their PBR,” adding, “Companies need to improve corporate governance and increase information disclosure to investors.” As of the end of last year, Taiwan’s PBR stood at 2.12 times, significantly higher than Japan’s 1.87 times and South Korea’s 0.95 times during the same period.