Taiwan’s market capitalisation stood at $4.95 trillion as of Monday, according to Bloomberg data, narrowly ahead of India’s $4.92 trillion.
The gain is largely attributable to Taiwan Semiconductor Manufacturing Co., which makes up about 42% of Taiwan’s benchmark index. TSMC shares have risen 49% this year, driven by demand for its chips in artificial intelligence infrastructure.
The rally reflects a broader global surge in technology stocks tied to AI investment, which has disproportionately benefited manufacturing-focused markets such as Taiwan and South Korea.
“Taiwan’s rising market capitalization is fundamentally a reflection of its heavy concentration in tech hardware, which is currently 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 overshadowed by tech hardware–heavy markets such as Taiwan and Korea.”
A recent regulatory change adds to TSMC’s advantage. Taiwan’s financial regulator last month raised the ceiling on how much domestic funds can invest in a single stock.
Funds investing solely in Taiwanese stocks may now hold up to 25% of their net assets in any listed company whose index weighting exceeds 10%, up from a previous limit of 10%.
TSMC is currently the only listed stock that meets the threshold. JPMorgan Chase & Co. estimated in a research note that the change could draw more than $6 billion in fresh inflows into Taiwan.
India, by contrast, is dealing with rising energy costs, slowing corporate earnings and a lack of listed companies directly linked to AI development. Indian stocks are down 8% this year, heading for their first annual loss after ten consecutive years of gains.
Foreign funds have sold nearly $24 billion worth of Indian equities so far this year, drawn instead to AI-linked markets. A weakening rupee has compounded the pressure. India’s weighting in the MSCI emerging markets index has fallen to about 12% from 19% last year.
“India has been quite ignored for the better part of two years,” said Alison Shimada, portfolio manager at Allspring Global Investments. “It is an expensive market so one has to be selective, but I think in terms of financialization of savings, it is very prominent in India and people are moving into financial assets.”
Despite losing ground in market value, India’s economy is considerably larger than Taiwan’s. The International Monetary Fund estimates India’s GDP at $4.15 trillion, compared with Taiwan’s $977 billion, making India one of the world’s fastest-growing economies.
(With input from agencies)
