Taiwan Overtakes India as World’s Fifth-Largest Stock Market
(Bloomberg) — Taiwan has overtaken India in stock market value, driven primarily by a dizzying rise in Taiwan Semiconductor Manufacturing Co., the world’s largest chipmaker.
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The island’s market value rose to $4.95 trillion as of Monday, according to data compiled by Bloomberg. India’s value dropped to $4.92 trillion. Taiwan’s stock exchange is currently the fifth largest stock exchange in the world, after the United States, mainland China, Japan and Hong Kong.
Taiwan’s rise in the global stock rankings is largely due to TSMC, which now accounts for about 42% of the benchmark index and represents heavy market concentration. Shares of the chipmaker have gained 46 percent this year as it has benefited from the AI trade, where semiconductors have a dominant position in the market.
The rise in the island’s market value underscores intense optimism about artificial intelligence, which has fueled a global rally in technology stocks that has disproportionately benefited manufacturing hubs such as Taiwan and South Korea. India, on the other hand, is grappling with rising energy costs, slowing corporate earnings growth, and a lack of companies directly linked to AI development.
“Taiwan’s rising market capitalization is fundamentally a reflection of its heavy concentration on technology hardware, which is now at the center of the AI investment cycle,” said Yi Ping Liao, fund manager at Franklin Templeton. “Markets with limited exposure to tech hardware are increasingly being eclipsed by tech hardware-heavy markets like Taiwan and Korea.”
The Taiex Index fell 0.3 percent on Tuesday. The indicator continues to be among the world’s best performers this year, up more than 50%. TSMC shares closed down 1.7%.
The new regulations are also in favor of TSMC. Taiwan’s financial regulator last month increased the limit that domestic funds can invest in a single stock. Under the new guidance, funds that invest exclusively in Taiwan stocks will be able to hold up to 25% of their net assets in any listed company with a weighting exceeding 10% on the Taiwan Stock Exchange, higher than the previous 10% limit. Currently only TSMC meets the criteria.
JPMorgan Chase & Co. The change could help attract more than $6 billion in inflows into TSMC, he said in a note.
While Taiwan is ahead in terms of market capitalization, India’s $4.15 trillion economy – among the world’s fastest-growing economies – still dwarfs the island’s $977 billion gross domestic product, according to estimates by the International Monetary Fund.
