India Risks Losing Its Spot As World’s 5th-Largest Stock Market As AI Boom Powers Taiwan, South Korea

India’s position as the world’s fifth-largest stock market is starting to look less secure. For the last two years, India stayed comfortably ahead, supported by strong economic growth and rising investor participation. But now, Taiwan and South Korea are quickly catching up.

Taiwan’s stock market value has climbed to nearly $4.60 trillion, while South Korea’s market cap has crossed $4.10 trillion. India is still ahead at around $4.90 trillion, but the gap has become much smaller.

The main reason behind this shift is the global boom in artificial intelligence (AI), which has boosted chip-making companies in Taiwan and South Korea.

TSMC And Chip Stocks Fuel Taiwan’s Rise

Taiwan’s stock market has seen a massive rally in 2026, emerging as one of the biggest winners of the global AI boom. In just the first four months of the year, the country added more than $1 trillion in market value, pushing its total market capitalisation up by nearly 40 per cent.

The momentum has been even stronger on a yearly basis. Over the last 12 months, Taiwan’s equity market has expanded by roughly $2.7 trillion, a jump of around 150 per cent.

TSMC, the world’s largest chipmaker, has led the surge as global demand for AI hardware continues to rise. The company alone makes up more than 40 per cent of Taiwan’s benchmark index.

The gains are not limited to TSMC. Companies such as MediaTek, Hon Hai Precision Industry, ASE Technology, Delta Electronics, and Quanta Computer have also rallied strongly as demand for AI servers, advanced chips, and semiconductor equipment increases globally.

Taiwan has now become one of the most important hubs in the global AI supply chain, supplying critical chips and components to companies including Nvidia.

Samsung, SK Hynix Lead Korea’s AI Rally

South Korea has also emerged as a major beneficiary of the AI race.

The country is home to Samsung Electronics and SK Hynix, two of the world’s biggest makers of High Bandwidth Memory (HBM) chips, which are widely used in AI servers and advanced graphics processors.

As global companies increase spending on AI infrastructure, demand for these chips has surged. In early May, SK Hynix jumped 13 per cent in a single day to hit a record high, while Samsung Electronics rose more than 5 per cent.

Together, Samsung and SK Hynix account for more than 40 per cent of South Korea’s benchmark Kospi index. Their strong rally has sharply increased the country’s overall market value.

Why India Is Losing Ground In The Global Market Cap Race

India, in contrast, has not benefited directly from the AI semiconductor boom.

Unlike Taiwan and South Korea, India does not yet have large listed companies deeply linked to global AI chip manufacturing. While Indian IT companies remain globally relevant, investors are increasingly worried that AI automation could reduce traditional outsourcing demand over time.

At the same time, India’s equity market is facing several near-term challenges.

Foreign institutional investors (FIIs) have remained aggressive sellers. By early May 2026, overseas investors had pulled out nearly Rs 1.92 lakh crore from Indian equities, already surpassing the previous year’s record outflows.

The weakening rupee has added another layer of pressure. Since January 2025, the Indian currency has depreciated from around 85 to nearly 95 against the US dollar. For foreign investors, this currency decline reduces returns in dollar terms even if Indian markets remain relatively stable locally.

Rising crude oil prices are also hurting sentiment. With Brent crude oil trading near $101 per barrel and India importing over 85 per cent of its crude requirement, higher energy prices raise inflation risks and put pressure on corporate margins and the current account deficit.

Frequently Asked Questions

1. Why are Taiwan and South Korea’s stock markets rising so rapidly?
Both countries are benefiting from the global AI boom, especially through semiconductor and memory chip companies linked to AI infrastructure.

2. Which companies are driving Taiwan’s market rally?
TSMC has led the rally, while companies like MediaTek, Hon Hai, ASE Technology, and Quanta Computer have also gained strongly.

3. Why is India losing ground in global market cap rankings?
India is facing FII outflows, rupee depreciation, rising oil prices, and lacks large listed companies directly benefiting from AI chip demand.

4. How important are Samsung and SK Hynix to South Korea’s market?
Samsung Electronics and SK Hynix together account for more than 40 per cent of South Korea’s benchmark Kospi index.