AI Surge Transforms Global Stock Market Landscape with Taiwan and South Korea Rising
AI boom: Global stock market order shuffles as Taiwan, South Korea overtake Western giants
The Economic Times
Image: The Economic Times
In 2026, the global stock market hierarchy has shifted dramatically due to the AI boom and geopolitical tensions, with South Korea's Kospi and Taiwan's market surpassing several Western exchanges. South Korea's Kospi has tripled in value, while Taiwan's market has risen to sixth globally, driven by demand for AI stocks and semiconductor companies.
- 01South Korea's Kospi index has tripled in less than 18 months, surpassing the UK's stock market to become the eighth largest globally.
- 02Taiwan's stock market has risen to the sixth largest, fueled by investor interest in artificial intelligence and a surge in Taiwan Semiconductor Manufacturing Co. (TSMC) shares.
- 03TSMC accounts for over 40% of Taiwan's market capitalization, while Samsung Electronics and SK Hynix make up 42.2% of South Korea's Kospi index.
- 04Analysts express differing views on the sustainability of the rally, with some drawing parallels to the dot-com bubble of the late 1990s.
- 05Foreign investors are increasingly favoring South Korea and Taiwan for AI and semiconductor investments, leading to significant outflows from the Indian stock market.
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The year 2026 has witnessed a significant reshuffling of the global stock market, primarily driven by the burgeoning artificial intelligence sector and ongoing geopolitical tensions, particularly the Iran-US war. South Korea's Kospi index has emerged as a standout performer, tripling in value within 18 months and surpassing the UK to rank eighth globally. This surge is reminiscent of the Nasdaq's rapid ascent before the dot-com crash, although some analysts argue that the current rally is more earnings-driven rather than multiple-driven, as seen in the 1990s. Meanwhile, Taiwan's stock market has climbed to the sixth position globally, propelled by strong demand for AI-related stocks and a remarkable rise in shares of Taiwan Semiconductor Manufacturing Co. (TSMC), which now constitutes over 40% of the market's capitalization. The concentration of capital in a few AI firms raises concerns about market sustainability, prompting discussions about potential parallels to past market bubbles. Additionally, significant foreign capital outflows from the Indian market have been noted, as investors shift focus towards these AI-driven markets.
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The shift in global stock market dynamics could lead to increased foreign investment in South Korea and Taiwan, potentially affecting local economies and stock valuations.
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