Arbitrage trade backfires as TSMC frenzy grows

FILE PHOTO: A smartphone with a displayed TSMC (Taiwan Semiconductor Manufacturing Company) logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

Taipei: The long-favoured arbitrage strategy of buying Taiwan Semiconductor Manufacturing Co’s (TSMC) Taipei shares while shorting its US listing is starting to become painful.

The enthusiasm over artificial intelligence (AI) in the United States has pushed TSMC’s American depositary receipts (ADRs) to their most expensive price versus the Taiwan stock since 2009 this quarter, data compiled by Bloomberg show.