This article first appeared on GuruFocus .
Taiwan Semiconductor Manufacturing ( NYSE:TSM ) shares climbed 7.45% to $379.41 at 9:50 a.m. ET on Friday, November 6, after Taiwan's Financial Supervisory Commission moved to curb short selling following a brutal session in Taipei. The ADR had dropped to $353.10 on Thursday. Friday's bounce shows how quickly sentiment can flip when a government steps in.
The rules are tough. Starting November 9, intraday short-sell orders will be capped at 3% of a stock's 30-day average daily volume, down from 30%, and the minimum short-sale margin rises to 130% from 90%. The Finance Ministry also said a NT$500 billion stabilization fund, about $15 billion, is available if needed. The Taiex fell as much as 9% on Friday, and TSMC's Taipei shares fell about 8.5%, according to 24/7 Wall St.
The GuruFocus chart shows a perfect GF Score of 100/100, with Profitability at 10/10 and Financial Strength, Momentum and GF Value at 9/10. The ADR trades almost exactly at its GF Value of $378.86 and about 24 times earnings, so the model sees fair value rather than a bargain. Short-sale curbs can slow selling, but they do not change demand; TSMC's monthly sales report is the next real test.
