The 23-year-old Taiwanese player began her round on the back nine and reached three under heading to the 10th hole where she made double bogey, but Tseng then conjured up five birdies to jump to the top of the leaderboard.
South Korean Na Yeon Choi held second place after a 67. She was six under through 13 holes but a pair of bogeys prevented her building on the bright start.
Third place was shared by another South Korean, Inbee Park, and New Zealand's South Korean-born 15-year-old Lydia Ko who both carded rounds of 68.
Wales' Becky Morgan, Scotland's Janice Moodie and England's Karen Stupples were the leading British players, all on one-under 71.