Why are US stocks cheap and Taiwanese stocks expensive? Understand how many shares make a lot, and you'll get it.

In the stock market, many investors find that the trading costs for the same listed company’s shares vary greatly across different markets. US stock trading has a low threshold, allowing investors to buy shares one by one, whereas Taiwan and Hong Kong stocks require purchasing larger quantities at once, resulting in higher initial capital requirements. The fundamental reason behind this lies in the different trading unit regulations in each country’s stock markets.

The Great Differences in Global Stock Trading Units

Different countries’ stock markets have their own trading conventions. In the US, the trading unit is “one share,” allowing investors to buy and sell any quantity of shares flexibly. Taiwan, on the other hand, uses “one lot” as the basic trading unit, and Hong Kong refers to it as “one lot” as well, with varying scales.

How many shares in a lot? In Taiwan, one lot equals 1,000 shares, meaning that to make a trade in the Taiwanese stock market, you must purchase at least 1,000 shares. The number of shares per lot in Hong Kong varies depending on the stock price, typically 100, 500, 1,000, or 2,000 shares. In contrast, US investors can freely decide the number of shares to trade each time.

The Relationship Between Stock Price and Trading Units

To understand why the same company’s stock has different trading costs across markets, it’s essential to clarify that the stock price is the transaction price per share, representing how much capital an investor needs to pay to buy one share. The stock price is determined by real-time matching of buy and sell orders and fluctuates with market movements.

For example, Tesla (TSLA.US) stock was priced at $101.81 on January 6, 2023, and rose to $254.11 by August 2. This indicates that buying one share of Tesla over a short span of 7 months increased the cost from $101.81 to $254.11.

Different countries quote in different currencies. US stocks are priced in USD, Taiwan stocks in New Taiwan Dollars (NTD), and Hong Kong stocks in HKD.

Actual Cost Calculation for One Lot of Stock

Once you understand the trading units, calculating trading costs becomes straightforward.

Taiwan example: TSMC (2330.TW) stock price is 1080 NTD. Buying one lot costs 1080×1000=1,080,000 NTD. The same company’s stock requires an investment of over a million NTD in a single transaction.

Hong Kong example: Tencent (0700.HK) stock price is 418 HKD. One lot contains 100 shares, so buying one lot costs 418×100=41,800 HKD.

US example: Tesla’s current price is $420. Buying one share costs only $420, giving investors great flexibility.

It’s clear that the same company’s stock incurs much lower single-transaction costs in the US market compared to Taiwan and Hong Kong.

The Difference Between Par Value and Stock Price

Many investors confuse the concept of stock par value with stock price. Par value is the value assigned per share when the company is established, used to record the original capital contribution of shareholders. For example, most listed companies in Taiwan have a par value of 10 NTD, but this has nothing to do with their actual stock price.

Stock price is entirely determined by the market, depending on the company’s profitability and investor expectations. As long as investors are optimistic about the company’s prospects, the stock price will keep rising. Therefore, investors only need to focus on the current market price; par value is just a historical record.

The Practical Impact of Investment Thresholds

From an investment threshold perspective, US stocks have a lower barrier because the trading unit is 1 share, making the initial investment smaller and more friendly to investors with limited funds. In contrast, Taiwan and Hong Kong stocks require larger minimum trading units (Taiwan’s 1 lot = 1000 shares), meaning each trade demands more capital. This is also why many people feel that trading in Taiwan stocks is “expensive.”

For investors with limited funds, understanding the trading unit mechanisms in each market helps in making more reasonable investment plans. Choosing a market that matches your capital scale allows for more flexible portfolio management.