Taiwan has moved ahead of India to become the world’s fifth-largest stock market by market capitalisation. The shift comes as global investors pour money into AI-linked semiconductor companies while Indian equities continue to face foreign outflows and slower earnings growth.
Taiwan climbs global market rankings
According to Bloomberg data, Taiwan’s stock market value climbed to nearly $4.95 trillion, overtaking India’s market capitalisation of around $4.92 trillion. Taiwan now ranks behind only the United States, mainland China, Japan and Hong Kong in the global equity market rankings.
The rally has been largely powered by Taiwan Semiconductor Manufacturing Company (TSMC), the world’s biggest chipmaker. TSMC’s shares have surged sharply this year amid growing global demand for artificial intelligence infrastructure and advanced semiconductors.
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TSMC and the AI effect
TSMC now reportedly accounts for nearly 42% of Taiwan’s benchmark index, highlighting how strongly the island’s market is tied to semiconductor manufacturing. The company has benefited from the global AI boom as firms such as Nvidia, Apple and AMD continue to depend on advanced chip production.
Analysts say the AI investment cycle has pushed global investors towards markets heavily focused on technology hardware and semiconductor manufacturing. Taiwan and South Korea have emerged as major beneficiaries of this trend.
“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,” fund manager Yi Ping Liao said.
Indian markets under pressure
Indian equities, meanwhile, have struggled this year due to foreign investors selling, high energy prices and slowing corporate earnings growth. Reuters reported that foreign portfolio investors have sold more than $24 billion worth of Indian equities in 2026 so far.
India’s benchmark indices have also declined, with the Nifty 50 and Sensex both posting losses this year. Analysts have pointed to the lack of major AI-focused listed companies in India compared to Taiwan’s semiconductor-heavy market.
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India’s broader economy remains stronger
Despite the market-cap shift, India continues to have a much larger and more diversified economy than Taiwan. India’s economy is estimated at over $4 trillion, while Taiwan’s GDP remains below $1 trillion, according to IMF estimates cited in reports.
Market experts believe the latest change reflects global investor preference for AI and semiconductor-linked economies rather than a weakening of India’s long-term economic fundamentals.
