Taiwan overtakes India as fifth-largest stock market

Taiwan overtook India as the world’s fifth-largest stock market on Monday, lifted by a surge in Taiwan Semiconductor Manufacturing Co. (TSM) as global investors kept piling into AI-linked chip names. Taiwan’s listed companies ended the day worth US$4.95 trillion, just above India’s US$4.92 trillion, Bloomberg reported.

The numerical gap was narrow. The market message was less so. Money has kept flowing to the semiconductor trade this year, and Taiwan’s ranking changed because one company sits at the centre of that trade.

The ranking is also easy to overstate. It does not settle any debate over the relative size of the Taiwanese and Indian economies, and it does not say much by itself about domestic demand in either market. It captures listed-company values on one day, shaped by sector mix, foreign flows and the handful of businesses closest to the current AI spending boom.

TSMC makes up 42 per cent of Taiwan’s benchmark index, and the stock has risen 49 per cent this year, according to The Business Times. With that kind of weight, moves in the chipmaker do not just lift the local benchmark. They can shift Taiwan’s place in the regional market rankings.

India’s slip by one place looks less like a break in fundamentals than a loss of investor attention. Global funds have rotated toward hardware groups tied to AI datacentre spending, while overseas investors have sold about US$24 billion of Indian equities so far this year, The Business Times said. That has left India’s broader but less concentrated market behind Taiwan’s narrower rally.

Why Taiwan pulled ahead

Yi Ping Liao, a Franklin Templeton fund manager, told The Business Times that Taiwan’s advance said more about index composition than about a lasting shift in Asia’s economic balance.

“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,” Liao said.

That concentration cuts both ways. A market led by one dominant company can surge when investors want exposure to advanced chips, but it can also give back ground quickly if the trade cools. For now, Taiwan is benefiting from that concentration rather than suffering for it.

No investor cited in the day’s coverage called India’s equity story broken. “India has been quite ignored for the better part of two years,” Alison Shimada, a portfolio manager at Allspring Global Investments, told The Business Times. Her point was narrower: flows have favoured Taiwan’s AI hardware exposure, but they can rotate back.

What investors watch next

The next test is whether Taiwan can hold the ranking without more market leadership beyond TSMC. A single stock can pull an index higher for a time, especially when passive and active money are leaning the same way. Keeping the spot will depend on whether AI spending continues to favour chipmakers, or whether India’s wider corporate base starts drawing money back as valuations, earnings expectations and risk appetite reset.