Why are the same stocks much more expensive in the Taiwan stock market compared to the US stock market? How do you calculate a stock priced at 10 yuan per share?

Trading Units Are the True Determinant of Stock Prices

Many investors new to the stock market are troubled by a phenomenon: the same company’s stock costs hundreds of thousands of NT dollars when bought on the Taiwan Stock Exchange, but only a few thousand dollars on the US stock market. What’s going on? The issue isn’t with the stock itself, but with the huge difference in trading units.

The trading rules for Taiwan stocks and US stocks are completely different. Taiwan stocks use “one lot” as the minimum trading unit, 1 lot equals 1000 shares. This means that buying one lot of stock in Taiwan is equivalent to purchasing 1000 shares. In contrast, US stocks are traded directly in “shares,” with the minimum trading unit being 1 share. This difference in trading units directly results in the “price difference” seen by investors.

Par Value of 10 Yuan Does Not Equal Stock Price

Many people confuse “par value” with “stock price.” Let’s clarify these two concepts.

Par value is the initial value set by the company when issuing stock. For example, in Taiwan, under the fixed par value system, most listed companies set their stock par value at 10 NT dollars. This 10 yuan is just used to record the original capital contribution of the shareholders and has no direct relation to the current market price of the stock.

Stock price is the real-time price determined by the market, representing the amount investors are willing to pay to own one share. Stock prices fluctuate based on the company’s profitability, investor expectations, market sentiment, and other factors. A well-performing, promising company’s stock price may be far above its par value; conversely, a struggling company’s stock price may even fall below par value.

Key to Understanding Stock Prices: Taiwan Stocks vs US Stocks

Let’s compare with concrete examples:

TSMC’s stock price in Taiwan is 561 New Taiwan Dollars, while in the US it’s about $95. If you want to buy one lot (1000 shares) of TSMC in Taiwan, it will cost 561 × 1000 = 561,000 NT dollars (about 560,000). But buying 1 share of TSMC in the US only costs $95 (about 3,000 NT dollars).

Tesla’s example better illustrates stock price volatility. On January 6, 2023, Tesla’s stock was $101.81; by August 2 of the same year, it soared to $254.11. In just 7 months, the stock price increased by over 150%.

This is why US stocks seem “cheaper” to small investors — because the difference in trading units, not the intrinsic value of the stock, is the reason.

Taiwan Stock’s Whole Shares and Odd Lots Trading

Due to the high threshold of 1 lot (1000 shares), Taiwan stocks introduced flexible trading mechanisms to accommodate retail investors.

Whole lot trading: Using 1 lot (1000 shares) as the minimum unit, with high capital requirements but strong liquidity. Trading hours are from 9:00 to 13:30 during the day, and after-hours from 14:00 to 14:30.

Odd lot trading: Buying and selling less than 1 lot (1–999 shares). The capital threshold is lower, but due to lower liquidity, it uses a periodic auction system, matching orders once per minute. Odd lot trading hours are from 9:00-13:30 during the day and 13:40-14:30 after hours.

This design allows investors with limited funds to participate in the stock market, but be aware that the speed of execution and price spreads for odd lots may not be as ideal as for whole lots.

Three Major Factors That Determine Stock Prices

Stock prices are not decided out of thin air; several important factors influence them:

Company fundamentals: including financial health, profitability, and growth prospects. Companies with good performance and strong cash flow tend to attract investors, causing their stock prices to rise naturally.

Macro-economic environment: macro data such as GDP, interest rates, and unemployment rates all impact the overall stock market performance. During economic growth, the stock market generally trends upward; during downturns, it declines.

Market sentiment: investor psychology and expectations are crucial. Positive news, political turmoil, global economic events (like pandemics) can trigger panic or optimism, leading to rapid stock price movements.

US Stock vs Taiwan Stock Trading Rules Quick Reference Table

Now you should understand why the same stock has such different “prices” in different markets. It’s not about the stock being expensive or cheap, but about the trading rules and market mechanisms. Next time you see a stock price, remember to check the trading unit, currency, and current market conditions to make informed investment decisions.