TSMC’s Stock Rally Disrupts Global Portfolio Strategies
Taiwan Semiconductor Manufacturing Co. has surged 36% year-to-date, becoming a gravitational force in global equity markets. The chipmaker now commands 43% of Taiwan’s Taiex index and 12% of MSCI’s emerging markets benchmark, creating compliance headaches for active managers constrained by single-stock exposure limits.
Funds managing over $100 billion face allocation dilemmas as TSMC’s runaway performance collides with regulatory ceilings. Some managers are employing derivatives and supply-chain proxies to capture the stock’s momentum indirectly—a workaround that underscores the semiconductor giant’s market-moving dominance.
The concentration risk is particularly acute in Asia-focused portfolios, where TSMC’s weighting dwarfs other components. This imbalance forces institutional investors to choose between tracking error and regulatory breaches, highlighting structural challenges in market-cap-weighted indices.
