TSMC’s $35 Billion Rally Puts Taiwan Stock Index Above 1990 Peak

(Bloomberg) — Taiwan’s equity benchmark broke a record that stood for three decades, helped by the biggest surge in years for the economy’s biggest stock.

The Taiex closed 2.3% higher Monday as Taiwan Semiconductor Manufacturing Co. soared the 10% daily limit. The $35 billion addition to its market capitalization makes TSMC the 12th most valuable stock worldwide, ahead of U.S. retail giant Walmart Inc. The chip producer for the likes of Apple Inc. wields so much influence over Taiwan’s 921-member stock benchmark that without it, the Taiex would be down about 2% this year versus its 5% gain.

Like Japan, Taiwan saw a bubble in its equities burst three decades ago, and it’s been a long climb back. But with a global rush into tech shares pushing the Nasdaq Composite Index to a record this month, overseas investors through July 24 sent $854 million into Taiwan’s tech-heavy stock market. That’s the largest net inflow among Asian markets tracked by Bloomberg, with most of Taiwan’s likely going into TSMC. It makes up almost a third of the market-cap weighted Taiex.

TSMC is among the few companies that have weathered the coronavirus outbreak without suffering a severe slowdown in business. Long-term investments in fifth-generation wireless technology and high-performance computing from its customers have sustained order volumes and the company even raised its 2020 outlook and expects capital expenditure to climb to as much as $17 billion.

The latest boost to TSMC’s shares, which were already up 17% for the year before Monday, came from a report suggesting Intel Corp. had placed orders with TSMC for 180,000 units of 6nm chips for 2021. Intel warned last week that its 7-nanometer chips are behind schedule and it may outsource their production.

Brokerages including Nomura Holdings Inc. and Credit Suisse Group AG raised their price targets for TSMC, pointing to the opportunities presented by Intel’s outsourcing decision.

Read more: Intel Plunges as It Weighs Exit From Manufacturing Chips

Taiwan’s stocks have proved resilient to both the pandemic and China-U.S. disputes this year. Local investors have also touted President Tsai Ing-wen’s efforts in containing the spread of the coronavirus, success that has kept the economy on track. Listed companies saw sales rise 6% in June from a year earlier, the strongest growth since October 2018, the Taiwan Stock Exchange said July 13.

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