Stock Trading Basics: How much does one share cost? The core differences in valuation methods between Taiwan stocks and US stocks

Why Is There Such a Large Difference in Trading Costs Between Taiwan Stocks and US Stocks?

Many novice investors will notice a phenomenon: the capital required to buy stocks in the Taiwan stock market seems much higher than in the US stock market. This seemingly paradoxical situation actually stems from fundamental differences in how the two markets are designed in terms of trading units. To understand this, we need to start with the most basic concept—the definition and calculation of stock prices.

The Essence of Stock Prices: Real-Time Reflection of Market Supply and Demand

Stock prices are not fixed; they are determined by continuous negotiations between buyers and sellers in the market. Every transaction represents a consensus reached between investors and sellers, and this price is called the stock price. In market quotes, the price per share indicates the current transaction price for a single share.

Stock prices fluctuate in real time based on market conditions. For example, a stock might trade at 10 yuan in the morning and rise to 12 yuan in the afternoon. These changes reflect differing market participants’ views on the company’s prospects.

Different countries use different currencies for pricing stocks—US stocks are priced in US dollars (USD), while Taiwan stocks are priced in New Taiwan Dollars (TWD). These are fundamental characteristics of the two markets.

Taiwan Stock Market Trading Units: The Difference Between “One Lot” and “One Share”

To understand why trading costs are higher in Taiwan stocks, we first need to understand the unique trading unit system in the Taiwan market.

In Taiwan’s stock market, there are two concepts: “one share” and “one lot.” Among them, 1 lot equals 1000 shares. This means that if an investor chooses to trade in lots, buying one lot means purchasing 1000 shares, unlike in the US where you can buy just one share.

This design, although rooted in historical reasons, indeed raises the entry barrier for retail investors. For example, if a stock’s price is 100 TWD, buying one lot would require 100×1000=100,000 TWD (about 560,000 yuan).

To lower the entry barrier, the Taiwan market also allows “odd lot” trading, enabling investors to buy between 1 and 999 shares. However, odd lot trading has lower liquidity, with only one auction per minute, and does not execute as immediately as full lot trading.

The US Stock Market Logic: Based on Single Shares

In contrast, the US stock market’s design is entirely different. The minimum trading unit is one share, allowing investors to flexibly decide how many shares to buy based on their capital, without restrictions to multiples of a certain size.

This means that even if a US stock is priced at $100, an investor can buy one share for $100 without needing to meet a minimum of 1000 shares. This flexibility greatly reduces the participation barrier in the stock market.

Practical Case Comparison: TSMC’s Price Difference in Dual Markets

TSMC is listed both in Taiwan and the US, making it an excellent case to observe the differences between the two markets. For example, at a certain point in time:

• Taiwan Stock (Code 2330): Price is 561 TWD, so buying one lot requires 561×1000=561,000 TWD (about 560,000 yuan)
• US Stock (Code TSM): Price is $95, so buying one share costs only $95 (about 3,000 TWD)

The same company’s stock, with a difference in trading units, results in a capital requirement that differs by over 100 times. This vividly illustrates how trading units impact investment thresholds.

Differences Between Full Lot and Odd Lot Trading in Taiwan Stocks

Due to the high threshold for full lot trading, Taiwan has developed a comprehensive odd lot trading system. Here is a comparison of the two trading modes:

For investors with limited funds, odd lot trading offers an entry point into Taiwan stocks. However, traders should be aware that liquidity constraints may affect entry and exit efficiency.

Factors Influencing the Price of a Share

Stock prices are not generated out of thin air; they are driven by multiple factors:

The company’s fundamentals directly influence investors’ willingness to buy. A profitable, well-performing company with promising prospects tends to attract buying interest, pushing its stock price higher. Conversely, if a company faces operational difficulties or bleak prospects, its stock price will be under pressure to decline.

Macroeconomic environment also plays a crucial role. Changes in interest rates, inflation data, GDP growth rates, and other macro factors influence overall market sentiment, which in turn affects individual stock prices.

Market sentiment—often underestimated but profoundly impactful—can be triggered by negative news, geopolitical risks, or global crises, leading to panic selling and rapid declines in stock prices.

Complete Trading Differences Between US and Taiwan Stocks

Stock Par Value vs. Stock Price: Common Investor Confusion

Investors often confuse “par value” with “stock price,” but they are conceptually different. Par value is the face value set by the company at listing, usually used to record the proportion of original shareholders’ capital. Most Taiwanese companies set a par value of 10 TWD, but this has no relation to the actual trading price.

A stock’s market price is entirely determined by the market and bears no relation to its par value. A well-performing, investor-favored company’s stock price can be many times higher than its par value.

Quickly Start Your Investment Journey

1. Register an account — Choose a suitable broker and complete the account opening process
2. Prepare funds — Deposit capital into your account through various convenient methods
3. Start trading — Select suitable targets based on your capital, and explore trading opportunities