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AI Boom Shifts Global Equity Power: Taiwan Leads
26 May
Summary
- Taiwan's market cap hit $4.95 trillion, surpassing India's $4.92 trillion.
- TSMC's 49% share rally this year fuels Taiwan's stock market growth.
- India faces outflows due to high valuations and energy costs.
Taiwan has emerged as the world's fifth-largest stock market, surpassing India with a market capitalization of $4.95 trillion as of Monday. This ascent is predominantly powered by Taiwan Semiconductor Manufacturing Co. (TSMC), the globe's largest chipmaker.
TSMC's shares have experienced a remarkable 49% rally this year, directly benefiting from the burgeoning artificial intelligence sector where its semiconductors hold a dominant position. This concentration in tech hardware has disproportionately benefited Taiwan and similar manufacturing hubs.
In contrast, India's market capitalization has dipped to $4.92 trillion. The nation is currently contending with increasing energy costs, a slowdown in corporate earnings growth, and a lack of direct involvement in the AI hardware supply chain.
Global funds have divested from Indian equities, with nearly $24 billion sold this year, shifting focus to AI-driven markets like Taiwan and South Korea. India's benchmark index has declined 8% year-to-date.
Recent regulatory changes in Taiwan allow domestic funds to increase their single-stock investment limits to 25% of net assets, potentially attracting over $6 billion in inflows. Despite its economic strength, India's stock market performance has been impacted by these global investment trends.
