Taiwan lifts fund cap to 25%

Taiwan’s financial regulator has raised the ceiling on how much local stock funds can put into a single company, opening the door for bigger bets on TSMC. (fsc.gov.tw) (cnbc.com) The Financial Supervisory Commission said on April 23 that domestic equity funds and actively managed ETFs focused only on Taiwanese stocks can exceed the old 10% single-stock limit starting April 24. (fsc.gov.tw) Under the new framework, those funds can hold up to 25% of net assets in one listed company if that stock accounts for more than 10% of the Taiwan Stock Exchange weighted index. (fsc.gov.tw) (cnbc.com) That condition sharply narrows the field. In practice, investors and analysts read the move as aimed at Taiwan Semiconductor Manufacturing Co., the market’s dominant heavyweight. (cnbc.com) (bloomberg.com) TSMC shares rose as much as 5.1% after the announcement and hit a fresh record, while Taiwan’s Taiex index climbed as much as 3.3%, according to Bloomberg. CNBC reported TSMC shares surged 5% on Friday. (bloomberg.com) (cnbc.com) JPMorgan said the rule change could unlock more than $6 billion of inflows into TSMC. The bank’s estimate helped frame the move as more than a technical tweak to fund rules. (bloomberg.com) The regulator said it was responding to the rapid growth of Taiwan’s technology sector and the rising weight of a few large listed companies in the broader market. It said the loosening would give fund managers more flexibility and help local asset managers offer more products. (fsc.gov.tw) The timing also follows a blowout quarter from TSMC. The company reported first-quarter net income of NT$572.48 billion, up 58% from a year earlier, marking a fourth straight record quarter as artificial-intelligence chip demand stayed strong. (cnbc.com) TSMC’s size has turned a fund-rule adjustment into a marketwide event. When one stock dominates an index, raising concentration limits can free local managers to track the market more closely, but it also ties portfolios more tightly to that company’s valuation and earnings. (fsc.gov.tw) (bloomberg.com) For now, Taiwan has chosen flexibility over a strict cap built for a less concentrated market. The immediate beneficiary is TSMC, and the next test is how much domestic money actually moves. (fsc.gov.tw) (bloomberg.com)