How AI is helping Taiwan, South Korea climb global-equity rankings
What's the story
Taiwan and South Korea have surpassed several European nations in global equity rankings, thanks to the artificial intelligence (AI) boom. Taiwan's stock market is now valued at nearly $4.3 trillion, overtaking the United Kingdom in global market value rankings. South Korea is close behind, just $140 billion short of the UK mark. The rise of these Asian markets can be attributed to TSMC (Taiwan Semiconductor Manufacturing Company), Samsung Electronics, and SK Hynix.
Semiconductor surge
Semiconductor dominance drives market shift
The rise of Taiwan and South Korea is largely due to their dominance in the semiconductor industry. Ian Samson, a portfolio manager at Fidelity International, explained that this trend reflects "the oligopolistic nature of leading-edge semiconductor manufacturing." This shift has also been fueled by strong export orders from Taiwan and South Korea, with both countries seeing a significant increase in chip shipments.
Market surge
Asian chipmakers outpace European counterparts
The AI boom has also propelled the market value of Asian chipmakers. TSMC's market capitalization is now $1.8 trillion, while Samsung and SK Hynix together are worth $1.5 trillion. In comparison, Europe's largest company, ASML Holding NV, is smaller than all three companies. The combined market cap of tech stocks in the Stoxx Europe 600 Index is around $1.4 trillion, further highlighting Asia's lead in this sector.
Investment trends
Rising retail investor participation in Asia
The AI boom is also attracting retail investors in Asia, with South Korea and Taiwan seeing more participation from domestic investors. Vikas Pershad, an Asia equities portfolio manager at M&G Investments, said these market cap gains are "justified" on a long-term view. Francesco Chan of JPMorgan Asset Management noted that while the AI story may seem narrow at the index level, it is broader across the supply chain.