9% of Taiwan's population becomes shareholders! Taiwan Semiconductor becomes the "default entry" for retail investors to layout AI, with stock prices reaching a new historical high

Zhitong Finance APP noted that as the AI trading frenzy returns, the crazy buying by retail investors has driven the stock price of Taiwan Semiconductor (TSM.US) to a historic high.

The stock price of this global top chip manufacturer climbed to a new high this week, recovering all losses since the outbreak of the Iran war. As a core supplier to NVIDIA (NVDA.US), Taiwan Semiconductor will announce its earnings report on Thursday, which will help global traders assess whether the rebound in AI infrastructure stocks is justified.

Although institutional investors still dominate Taiwan Semiconductor's shareholding, the influence of individual investors is increasingly expanding with the surge in retail numbers. The number of "odd lot" holders (often equated with retail investors) of the stock has increased by about 30% since the end of February, reaching a historic high of over 2 million people. Odd lot shareholders hold fewer shares than the minimum trading unit set by the exchange (usually 100 shares).

Pepperstone Group Limited strategist Dilin Wu stated, "The retail participation we are seeing is not a cyclical surge, but a structural shift in terms of access thresholds and narrative penetration," adding, "Taiwan Semiconductor has effectively crossed a threshold: it is no longer just a semiconductor synonym held by institutions, but the 'default entry point' for retail access to the AI cycle."

The number of odd lot investors in Taiwan Semiconductor has increased to over 2 million.

In recent years, the increasing importance of retail investors has become a theme in global markets. However, few companies can attract individual investors in the local market as strongly as Taiwan Semiconductor.

Taiwan Semiconductor accounts for as much as 45% of the benchmark Taiwan Weighted Index (Taiex), which poses challenges for actively managed funds that have a 10% single-stock allocation limit, but it has fueled the influence of retail traders.

A more attractive regulatory environment is also playing a role. The introduction of regular investment plans (supporting automatic, periodic purchases of stocks and ETFs) has encouraged more households to participate.

The Iran war has accelerated this trend, as ordinary people flocked to Taiwan Semiconductor while foreign funds reduced their positions to avoid risks. Data shows that in March, the proportion of odd lot trading in Taiwan Semiconductor increased in total trading volume, with one trading day’s proportion even approaching 20%.

Matt Toms, head of cash equities for Barclays in the Asia-Pacific region, stated, "Retail activity often increases with rising volatility, especially as investors view any weakness as a 'buying opportunity.'"

TSMC's trading volume of odd lots surged in March

Tareck Horchani, head of sales trading at Malayan Banking Berhad Securities, believes that part of this surge may be due to arbitrage trading aimed at profiting from the temporary price differences between odd lots and whole shares.

Nevertheless, data from the stock exchange shows that as of the end of March, there were over 206,000 retail accounts regularly investing in TSMC stocks, an increase of more than 20% compared to February.

ETFs are another major source of retail funds. The largest ETF in Taiwan, Yuanta/P-shares Taiwan Top 50 ETF, recorded a record inflow of funds in March. This fund has a holding weight of over 60% in TSMC and nearly 1 million investor accounts making regular purchases.

Currently, the number of odd lot traders in TSMC is approaching 9% of Taiwan's population.

Liu Zongsheng, chairman of Yuanta Investment Trust, stated, "Unlike past situations such as the 2008 financial crisis or the market downturn in 2022, a shift over the past year is that retail investors tend to buy during declines but do not necessarily sell during rebounds," he added, which provides a "buffer effect" for TSMC's stock price.

TSMC's stock price hits a new high

The recent return of market appetite for technology hardware stocks has also provided a boost. After TSMC reported a 35% revenue growth for the first quarter last week, the upcoming detailed performance may bring further positive news