Sinking TSMC ADR Premium Offers Trading Window, UBS Desk Says

The narrowing gap between Taiwan Semiconductor Manufacturing Co.’s Taiwanese shares and its US-listed stock is creating a new trading opportunity, according to a UBS Group AG client note.

Hedge fund traders should consider buying TSMC’s New York shares while shorting those traded in Taipei, wrote Eric Song, head of equities for Taiwan at the UBS Global Markets division. The derisking triggered by the Iran war has been more pronounced for foreign institutional investors than locals, and improving sentiment may drive a rebound in the ADR premium, he said.