Global market reordering is accelerating as the AI rally gains pace
Wall Street bull stands in the financial district near the New York Stock Exchange on November 18, 2025 in New York City.
Spencer Platt | Getty Images
A global realignment of the stock market hierarchy is underway, with AI redrawing the hierarchical order of stock markets and Taiwan and South Korea leaving established Western stock markets behind.
According to HSBC’s data tracking global stock market capitalization rankings, Taiwan surpassed Canada to become the world’s sixth largest stock exchange, while South Korea surpassed the United Kingdom and ranked eighth. It’s the latest indication of how the AI boom is concentrating market power in economies at the heart of the semiconductor supply chain.
Taiwan’s stock exchange was the 12th largest stock exchange in the world, valued at approximately $500 billion in 2004. South Korea ranked 13th with 400 billion dollars. Today, the two markets are worth $4.7 trillion and $4.4 trillion respectively. The top five are the USA, China, Japan, Hong Kong and India.
Such a change is not unprecedented. While China rose to the top of global markets in the late 2000s, India fell below it, surpassing Hong Kong in late 2023.
However, the rise of South Korea and Taiwan is notable.
“What’s unusual here is how narrow the pace and drivers are,” said Billy Leung, global investment strategist at Global X ETFs. “The top 10 changes occur in almost every cycle, but usually follow a domestic boom, a major IPO, or many years of outperformance.”
This rise has occurred due to extraordinary capital concentration in a handful of AI-related firms. TSMC alone now accounts for more than 40% of Taiwan’s market capitalization, while Samsung Electronics and SK Hynix together account for a record 42.2% of South Korea’s Kospi index.
The top 10 changes occur in almost every cycle, but usually follow a domestic boom, a major IPO, or many years of outperformance.
“Both indexes have effectively become AI and semiconductor surrogates,” said June Chua, head of Asian equities at Manulife Investment Management.
Tim Moe, chief regional equity strategist for Asia-Pacific at Goldman Sachs, agrees.
“I think it’s clearly the AI hardware theme that’s moving things forward.” The agency said the shift to artificial intelligence had triggered “an explosion in demand for so-called tokens,” creating a supply shortage that has increased extraordinary pricing power for chip makers.
This could also make gains more vulnerable to reversal. South Korean stocks fell late last week after foreign investors sold local stocks worth about $13 billion, sparking sharp swings in the benchmark index. This also comes as shares of Kospi heavyweight Samsung Electronics took a hard hit as investors monitor labor negotiations and the potential for strikes.
““We are now reaching levels where many Asian portfolios face concentration risk, meaning too much exposure to a small number of stocks in the region,” said Herald van der Linde, head of Asia-Pacific equity strategy at HSBC. “This could limit further upside.”
This concentration risk has also led to comparisons with markets such as Saudi Arabia and Denmark, where benchmark indices are dominated by Aramco and Novo Nordisk respectively.
Danish stocks remained under pressure as concerns grew over falling demand for obesity treatments produced by Novo Nordisk, while the Saudi Arabian market, driven largely by Saudi Aramco, weakened along with falling crude oil prices. As oil prices rebounded, Saudi stocks recouped some of these losses.
