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Technology Stocks : Taiwan Semiconductor (NYSE: TSM) -- Ignore unavailable to you. Want to Upgrade?

To: kas1 who wrote (491)	5/13/1999 10:01:00 AM
From: tom	Read Replies (2) \| Respond to of 684

The Chairman of TSMC, the Taiwanese government, Philips and Capital International all own huge amounts of local stock (>50% in aggregate) and are just waiting to dump it on to US investors at a huge premium. The recent move to allow local holders of more than 0.02% of the company to convert local stock into ADRs now allows this. Why won't this narrow the differential? As the holders of TSMC (local) arbitrage the difference in valuation between the ADR and the local stock by converting their holdings into ADRs then the premium must narrow as the supply of ADRs increases (all other things being equal) This happens in Korea all the time and I can't think of a time when the ADR premiums haven't narrowed.