Taiwan has surpassed India in stock market value, driven by a sharp rally in Taiwan Semiconductor Manufacturing Co. and the broader strength of technology hardware stocks tied to the artificial intelligence investment boom. Taiwan’s market capitalization rose to $4.95 trillion as of Monday, edging past India’s $4.92 trillion, and making Taiwan the world’s fifth-largest stock market after the United States, mainland China, Japan and Hong Kong.
The move reflects the outsized role of TSMC in Taiwan’s equity market. The chipmaker now represents about 42% of the benchmark index, underscoring how concentrated the market has become. TSMC shares have climbed 46% this year, benefiting from surging demand linked to AI infrastructure, where the company holds a dominant position in semiconductor manufacturing. Taiwan’s benchmark Taiex Index has been one of the strongest performers globally in 2026, rising more than 50% even after a 0.3% decline on Tuesday. TSMC shares ended the day 1.7% lower.
The rally in Taiwan highlights a broader global shift in investor preference toward markets closely tied to AI and advanced hardware production. Manufacturing hubs such as Taiwan and South Korea have benefited from the surge in demand for chips and related technology, while markets with less direct exposure to AI hardware have lagged. Fund managers say this concentration in tech hardware has made Taiwan increasingly attractive in the current investment cycle.
India, by contrast, has faced pressure from multiple fronts. Rising energy costs, slower corporate earnings growth and the absence of major companies directly tied to AI buildout have weighed on sentiment. Indian equities have also been hit by elevated valuations, a weakening rupee and heavy foreign investor selling. Global funds have dumped nearly $24 billion of Indian equities so far this year, as capital has rotated into Taiwan and South Korea to capture AI-related gains.
The outflow has left Indian stocks underperforming, with the country’s main equity gauge down 8% this year and on track for its first annual decline in a decade. India’s weight in the MSCI emerging markets index has also fallen to about 12% from 19% a year earlier, reflecting the shift in global portfolio allocations.
Regulatory changes in Taiwan may further support TSMC’s dominance. Taiwan’s financial regulator recently raised the cap on how much domestic funds can invest in a single stock. Funds that invest only in Taiwanese equities can now hold up to 25% of net assets in any listed company with a weighting above 10% in the Taiwan Stock Exchange, up from 10% previously. TSMC is currently the only company that qualifies, and JPMorgan has estimated the rule could attract more than $6 billion in additional inflows into the stock.
Despite Taiwan’s lead in market value, India remains the larger economy. The International Monetary Fund estimates India’s GDP at $4.15 trillion, compared with Taiwan’s $977 billion. That contrast highlights the difference between economic size and stock market performance, with Taiwan’s equity market increasingly powered by a single AI-linked champion.
