Shares of Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, moved sharply higher Monday to return to the level the stock was at before going ex-dividend on June 24.
Ex-dividend refers to when the stock trades without the value of the next dividend payment. TSMC shares closed at NT$248.50 (US$8.02) on June 21, before having their dividend of NT$8 per share deducted and opening at NT$240.50 at the start of trading on June 24.
On Monday, TSMC shares rose 3.97 percent to close at NT$248.50, off a high of NT$250.00, with 66.24 million shares changing hands on the Taiwan Stock Exchange, where the weighted index ended up 1.53 percent at 10,895.46.
That meant the stock recovered to its pre-ex-dividend level in just six sessions, the fastest the stock has achieved the feat in three years.
The stock needed 20 trading sessions to return to its prior ex-dividend level in 2018 and 32 trading sessions in 2017. In 2016, the stock spent only three trading sessions to return to the prior ex-dividend level.
TSMC's strong showing largely reflected a decision made by the United States to allow American tech firms to sell products to Chinese telecom equipment and smartphone supplier Huawei Technologies Co., a major TSMC customer.
The decision was among the positive leads that emerged from the G20 summit June 28-29, when U.S. President Donald Trump met with Chinese President Xi Jinping and lifted the ban on Huawei, shrugging off national security concerns, dealers said.
"The move by Washington to lift the ban against Huawei sparked strong buying in TSMC since the Chinese company is one of the major buyers of TSMC's chips," Yong Cheng International Securities Investment Consulting analyst Jerry Chen said.
Analysts have estimated that Huawei accounts for 5-10 percent of TSMC's total sales.
"The solid gains posted by TSMC made the stock technically healthier, paving the path for a further uptrend down the road," Chen said. "It bodes well for the broader market." TSMC is the most heavily weighted stock in the local market.
Judging from TSMC's upturn, Chen said he suspected foreign institutional investors were net buyers of the stock Monday. The TWSE will release details on foreign investor net buys or net sells for individual stocks later in the day.
Analysts said the lifting of the ban against Huawei has boosted optimism toward the business prospects of TSMC and the entire semiconductor industry in the second half of this year.