Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) market capitalization hit a fresh high yesterday morning, after the world’s largest pure wafer foundry operator proposed a better-than-expected cash dividend, dealers said.
Buying in TSMC shares also reflected optimism toward its bottom line after the firm reported a new sales high for last month, defying a usually slow season for the semiconductor sector, dealers added.
The strength of TSMC, the most heavily weighted stock in the local market, boosted the broader market, helping the index climb from a weak session earlier, they said.
TSMC shares soared 3.86 percent to close at NT$148 yesterday in Taipei trading. The TAIEX inched up 0.73 percent.
Due to the higher share price, TSMC’s market capitalization reached a new high of NT$3.84 trillion (US$121.7 billion).
“Judging from the current buying, I suspect that foreign institutional investors stayed on the buy side because foreign investors — who are the majority shareholders of TSMC — will be the major beneficiaries of the proposed cash dividend for last year,” MasterLink Securities (元富證券) analyst Tom Tang (湯忠謙) said. “The gains posted by TSMC’s American depositary receipts [ADRs] overnight indicated that foreign investors hailed the proposed cash dividend.”
The stock’s ADRs rose 5.25 percent on Wall Street.
In a board meeting, TSMC proposed issuing a cash dividend of NT$4.5 for last year after it posted a record high earnings per share of NT$10.18.
The proposed dividend represented a payout ratio of 44.2 percent and beat previous market expectations of a NT$4 cash dividend.
TSMC is to seek final approval for the proposed cash dividend at its annual shareholders meeting scheduled for June 9.
“In addition to the higher-than-expected cash dividend, many investors appeared happy with TSMC’s January sales report. It surprised the market because it was not affected by the normally slow first quarter,” Tang said.
TSMC posted consolidated sales of NT$87.12 billion last month, up 25.3 percent from a month earlier and 69.4 percent from a year earlier.
“TSMC is a fundamentally sound company. As long as foreign institutional investors continue to buy into the stock, the broader market is expected to move higher, like today’s market movement,” Tang said.
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