Daijiworld Media Network - New Delhi
New Delhi, May 26: Taiwan has overtaken India in stock market value, driven largely by a sharp rally in shares of Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker.
According to data compiled by Bloomberg L.P., Taiwan’s market capitalisation climbed to $4.95 trillion as of Monday, surpassing India’s $4.92 trillion. Taiwan’s stock market is now the fifth largest globally after the US, mainland China, Japan and Hong Kong.
Taiwan’s rise in global equity rankings has been largely fuelled by TSMC, which now accounts for around 42 per cent of the benchmark index, reflecting a high level of market concentration. The company’s shares have surged 49 per cent this year amid growing global demand linked to the artificial intelligence (AI) boom, where its semiconductors hold a dominant position.
The rally highlights strong investor optimism surrounding AI, which has triggered a global surge in technology stocks and disproportionately benefited manufacturing hubs such as Taiwan and South Korea.
India, meanwhile, is facing challenges including rising energy costs, slowing corporate earnings growth and a shortage of companies directly connected to the AI supply chain and infrastructure expansion.
“Taiwan’s rising market capitalisation is fundamentally a reflection of its heavy concentration in tech hardware, which is currently at the centre of the AI investment cycle,” said Yi Ping Liao, fund manager at Franklin Templeton.
“Markets with limited exposure to tech hardware are increasingly being overshadowed by tech hardware-heavy markets such as Taiwan and Korea,” Liao added.
Recent regulatory changes have also strengthened TSMC’s position. Taiwan’s financial regulator last month raised the investment limit for domestic funds in a single stock. Under the revised rules, funds investing only in Taiwanese equities can now allocate up to 25 per cent of their net assets to any listed company whose weighting exceeds 10 per cent on the Taiwan Stock Exchange, up from the earlier 10 per cent cap.
Currently, TSMC is the only company meeting the criterion.
JPMorgan Chase & Co. said the rule change could attract more than $6 billion in inflows into Taiwan’s market.
Despite Taiwan overtaking India in market value, India’s economy — estimated at $4.15 trillion and among the fastest-growing globally — remains significantly larger than Taiwan’s $977 billion gross domestic product, according to International Monetary Fund estimates.
Indian equities have come under pressure this year amid record foreign fund outflows, driven by high valuations and a weakening rupee. Rising energy prices have also increased inflation concerns and affected growth sentiment.
Global investors have reportedly sold nearly $24 billion worth of Indian equities so far this year as they shifted focus towards the AI-driven rally in Taiwan and South Korea. India’s benchmark stock index has fallen 8 per cent, putting it on track for its first annual decline after a decade of gains.
India’s weight in the MSCI Emerging Markets Index has also declined to around 12 per cent from 19 per cent last year.
“India has been quite ignored for the better part of two years,” Alison Shimada, portfolio manager at Allspring Global Investments, told Bloomberg TV.
“It is an expensive market so one has to be selective, but in terms of financialisation of savings, it is very prominent in India and people are moving into financial assets,” she added.