Taiwan overtakes India as world’s fifth-largest stock market

Published Tue, May 26, 2026 · 10:44 AM

[SINGAPORE/MUMBAI] Taiwan overtook India in stock market value, powered mainly by a breakneck rally in the world’s largest chipmaker Taiwan Semiconductor Manufacturing Company (TSMC).

The island’s market capitalisation climbed to US$4.95 trillion as at Monday (May 25), according to data compiled by Bloomberg. India’s value has dropped to US$4.92 trillion. Taiwan’s stock market is now the fifth largest in the world, behind only the US, mainland China, Japan and Hong Kong.

Taiwan’s ascent up the global equity rankings is largely driven by TSMC, which now accounts for about 42 per cent of the benchmark index, representing intense market concentration. The chipmaker’s shares have rallied 49 per cent this year as it has benefited from the artificial intelligence trade, in which its semiconductors have a dominant market position.

The surge in the island’s market value highlights intense optimism in AI that is triggering a global rally in tech shares, disproportionately benefiting manufacturing hubs such as Taiwan and South Korea. India, on the other hand, is grappling with surging energy cost, slowing corporate earnings growth and the lack of companies directly linked to the AI buildout.

“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, a 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.”

New regulations are also in TSMC’s favour. Taiwan’s financial regulator last month increased the limit that domestic funds can invest in a single stock. Under the new guideline, funds that invest solely in Taiwanese stocks can hold up to 25 per cent of their net assets in any listed company whose weighting exceeds 10 per cent in the Taiwan Stock Exchange, up from a previous limit of 10 per cent. Currently, only TSMC meets the criterion.

The change may help lure in more than US$6 billion of inflows to Taiwan, JPMorgan Chase said in a research note.

While Taiwan has overtaken in market value, India’s US$4.15 trillion-dollar economy – among the fastest growing in the world – still trumps the island’s US$977 billion gross domestic product, according to International Monetary Fund estimates.

Indian stocks have fallen this year amid record foreign outflows, driven by elevated valuations and a weakening rupee. Higher energy costs have also stoked inflation concerns and clouded growth prospects.

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Global funds have sold nearly US$24 billion of local equities so far this year as they chased the AI boom in Taiwan and South Korea. India’s gauge is down 8 per cent, heading for its first annual drop after a decade of gains. India’s weight in the MSCI emerging markets index has also fallen to about 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, said on Monday. “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,” she said. BLOOMBERG