How TSMC's 49% rally pushed Taiwan past India into world's top 5 stock markets

Taiwan’s stock market capitalization surpassed India’s for the first time, reaching $4.95 trillion as of Monday, according to Bloomberg data. The surge is largely attributed to Taiwan Semiconductor Manufacturing Co. (TSMC), which accounts for 42% of Taiwan’s benchmark index and has seen its shares rise 49% this year. TSMC’s growth reflects global AI investment demand for its chips, positioning Taiwan as a leader in tech hardware manufacturing. The shift was further accelerated by a regulatory change last month, which increased the limit for domestic funds investing in a single stock from 10% to 25% of net assets for companies with over 10% index weighting. TSMC is the only stock meeting this threshold, and JPMorgan Chase estimates the change could attract over $6 billion in new investments. India’s market, meanwhile, has struggled with rising energy costs, slowing corporate earnings, and a lack of AI-linked companies. Indian stocks are down 8% this year, marking their first annual loss in a decade, while foreign funds have sold nearly $24 billion worth of Indian equities. The weakening rupee has worsened the pressure, reducing India’s weighting in the MSCI emerging markets index from 19% last year to about 12%. Despite its market decline, India’s economy remains significantly larger than Taiwan’s, with a GDP of $4.15 trillion compared to Taiwan’s $977 billion. However, Taiwan’s tech-driven market growth has overshadowed India’s broader economic strength, highlighting the impact of AI investment on semiconductor-heavy economies. Analysts note that markets with limited tech exposure, like India, are being outpaced by those like Taiwan and South Korea, where hardware manufacturing dominates the AI investment cycle. Franklin Templeton’s Yi Ping Liao emphasized that Taiwan’s rise is a direct result of its concentration in tech hardware, which is central to current AI demand.