Taiwan overtakes India as world's No. 5 stock market

Taiwan’s stock market capitalization surpassed India’s for the first time, reaching $4.95 trillion at Monday’s close, up from India’s $4.92 trillion. The shift was led by Taiwan Semiconductor Manufacturing Co. (TSMC), whose shares climbed 46% this year, lifting the Taiex index by over 50%. TSMC alone accounts for 42% of Taiex’s total market value, though its shares dipped 1.7% and the index slipped 0.3% on Monday. Taiwan’s financial regulators recently eased restrictions, allowing stock funds to allocate up to 25% of net assets to a single stock if it represents over 10% of the exchange’s market value—a rule tailored to TSMC. JPMorgan Chase estimates this change could attract over $6 billion in additional investments. Meanwhile, India’s stock market faced record foreign outflows of $24 billion this year, with capital redirected to Taiwan and South Korea amid the AI boom. India’s benchmark index dropped 8% annually, risking its first decline in a decade, while its MSCI Emerging Markets weighting fell from 19% to 12%. Despite India’s GDP ($4.15 trillion) being over four times larger than Taiwan’s ($977 billion), Taiwan’s tech-driven market capitalization now exceeds India’s. Analysts attribute the reversal to Taiwan’s dominance in AI hardware, overshadowing markets with limited tech exposure. Some investors still see value in India, noting its shift toward financial assets amid neglect over the past two years. However, the broader trend highlights Taiwan’s pivotal role in the AI-driven global economy.