Highlights

Despite Taiwan Semiconductor Manufacturing Company (TSMC) clearing market doubts, foreign investors continue to sell, causing Taiwan's weighted stock index to slightly dip last week. Although the Arizona subsidiary's loss widened last year, TSMC's projected capacity and advanced process sales suggest potential stability. No shipping rush was observed despite tariff exemptions.

Sentiment Analysis

• The sentiment around TSMC's performances and foreign selling trends remains mixed, reflecting cautious optimism in the market.
• Investors are wary of ongoing uncertainties due to unpredictable U.S. tariff decisions and potential currency manipulation labels for Taiwan.
• The absence of a tariff-induced shipping rush suggests cautious market outlook amidst external pressures and policy adaptations.

Article Text

Last week, TSMC effectively addressed numerous market concerns during its legal release. However, foreign investors maintained a selling stance, leading to a marginal decline of 133.74 points in Taiwan's weighted index. This occurred amid continued falls in the U.S. stock market and the domestic repercussions of U.S. President Trump's remarks about potentially dismissing Federal Reserve Chairman Powell, which added to market uncertainties.

The individual stock rebound within Taiwan's market was noteworthy, with over 30 stocks gaining more than 20%, showcasing improved capital participation. TSMC reported its 2024 annual results, highlighting the initiation of mass production at its Arizona wafer plant. Nonetheless, due to temporal lags between production ramp-up and revenue recognition, its subsidiary, TSMC Arizona Corporation, witnessed an expanded loss from 109.25 billion NT dollars in 2023 to 142.98 billion in 2024.

TSMC's plans for 2024 include increasing its wafer capacity to approximately 17 to 18 million 12-inch equivalent wafers, a growth of around 4% year-over-year, concentrating on sub-7nm processes which are expected to increase their sales percentage from 69% last year to between 70% and 80%. Also, the Shanghai Shipping Exchange noted a slowdown, as the weekly container freight index fell 24.1 points to 1370.58, indicating a lack of a rush due to tariff exemptions and a watchful market.

The Central Bank warned about Taiwan possibly being listed again as a currency manipulator in the upcoming U.S. Treasury's currency report, historically released semiannually in April and October. The Financial Supervisory Commission (FSC) introduced temporary market stabilization measures in response to the impact of U.S. retaliatory tariff policies, which include adjusting daily short-selling orders and easing collateral requirements.

Currently ongoing, the 'Short Sale Ban' initiative was devised as tariff negotiations remain uncertain, allowing continuous market evaluation. Amidst global economic tensions, the FSC seeks to stabilize the local stock market further.

Key Insights Table