Investment Must-Know: How to Calculate the True Price of One Share or Stock

Why Do Taiwanese Stocks Look So Expensive When Buying and Selling? The Key Lies in Trading Units

Many novice investors share the same confusion: why does buying a single stock in Taiwan cost tens of thousands of NT dollars, while in the US it only costs a few thousand? The root of the issue is not the quality of the stocks themselves, but the fact that the two markets adopt completely different trading unit systems.

Taiwanese stocks use “one lot” as the basic trading unit, while US stocks use “one share.” This seemingly simple difference directly impacts investors’ entry costs and purchasing difficulty.

What Is Stock Price? How to Understand the Trading Price of Stocks

Stock price represents the amount an investor needs to pay to buy one share of stock. In the stock market, stock prices fluctuate in real-time based on supply and demand—rising when buyers are more active, falling when sellers are eager to sell.

Different countries’ stock markets quote in different currencies. The US stock market is quoted in US dollars (USD), while Taiwan’s stock market is quoted in New Taiwan Dollars (TWD). For example, Tesla (TSLA) was priced at $254.110 per share on August 2, 2023, whereas on January 6 of the same year, it was only $101.81. In less than seven months, the stock price more than doubled.

Similarly, TSMC’s market price on April 30, 2024, was NT$32.10 per share. The stock price’s high or low is closely related to the company’s profitability, market prospects, and investor expectations.

How Much Is One Share of Stock Really Worth? The Difference Between Par Value and Market Price

Many people confuse “par value” and “market price” of stocks. In fact, par value is merely a record of the original capital contributed by the company’s shareholders and has no relation to the market price.

For example, in Taiwan, due to the historical implementation of a fixed par value system, most listed companies have a stock par value of NT$10. But this par value number has almost no reference value for investment decisions. Investors should focus on the current market price—that is, the actual transaction price in the trading market.

Taking TSMC as an example, if the current market price is NT$561 per share, then purchasing one share of TSMC at that moment requires NT$561.

What Is the “One Lot” Unique to Taiwanese Stocks? Why Is It So Expensive?

The answer is straightforward: one lot in Taiwan equals 1000 shares.

In other words, when you buy one lot of stock in Taiwan, you are actually purchasing 1000 shares. This results in a much higher threshold for whole-lot trading compared to US stocks.

For example, if TSMC’s stock price is NT$561, then buying one lot costs:

NT$561 × 1000 = NT$561,000 (about 560,000 NT dollars)

This is a huge capital requirement for most retail investors.

The Emergence of Odd-Lot Trading: Opening the Investment Door for Retail Investors

To solve the problem that ordinary investors cannot buy a full lot, Taiwan’s stock market introduced the “odd-lot trading” system. Odd-lot trading allows investors to buy less than one full lot (from 1 to 999 shares).

Although odd-lot trading greatly lowers the investment threshold, it also has notable disadvantages:

Odd-lot trading has lower liquidity, meaning that in urgent selling situations, there may be fewer buyers. Therefore, investors should prioritize full-lot trading when their funds permit.

Comparing Transaction Costs Between US Stocks and Taiwanese Stocks

Because of the difference in trading units, the purchase costs for the same company listed on different stock markets can vary greatly.

For example, TSMC is listed on both the Taiwan stock market (code 2330) and the US stock market (code TSM). Assuming the Taiwan stock price is NT$561, and the US stock price is $95:

• Taiwan Stock Market: Buying one lot costs NT$561 × 1000 = NT$561,000
• US Stock Market: Buying one lot costs $95 × 1 = $95 (about NT$3,000)

This is not the whole story. The two markets also differ significantly in trading hours, transaction fees, price limit rules, etc.:

The low fees and flexible trading units in the US make it more friendly for small investors. However, the introduction of odd-lot trading in Taiwan has somewhat narrowed this gap.

What Truly Determines a Stock’s Price

Stock prices are not fixed; they are influenced by multiple factors:

Company Operating Status is the most direct factor. Companies with strong performance and profitability attract more investors, pushing their stock prices higher. Investors can evaluate a company’s investment value by analyzing financial statements, earnings data, and growth prospects.

Macroeconomic Environment also has a broad impact. Indicators such as economic growth, interest rate changes, inflation, and GDP influence the overall stock market performance and, consequently, individual stock prices.

Market Sentiment and Expectations are often the most volatile short-term drivers. When investors are optimistic about the future, they actively buy, driving prices up. Conversely, negative news, political risks, or global economic crises (like pandemics) can trigger panic selling, causing stock prices to plummet.

Understanding these factors is crucial for investment decisions. Investors need to find a balance between fundamental analysis and market sentiment to make wiser choices.