Taiwan and South Korea Leapfrog India in Market Cap Rankings

CNBC reported Wednesday that Taiwan and South Korea have overtaken India in global equity market capitalization within the span of a single week, as an artificial intelligence-driven rally lifts Asian rivals while the India equity market struggles with weakening fundamentals.

AI Stocks Rewrite Asia’s Market Hierarchy

Taiwan’s total market cap crossed nearly $5 trillion on May 26, pushing it past India to become the world’s fifth-largest equity market. South Korea followed within days, displacing India from sixth place entirely. The surge is being driven by AI-linked giants including TSMC, Samsung, and SK Hynix, each now valued at over $1 trillion. South Korea’s Kospi 200 has gained more than 130% year-to-date, while Taiwan’s FTSE TWSE 50 is up over 60%. Indian benchmark indices, by contrast, have fallen more than 10% over the same period.

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Why India Is Missing the AI Wave

India has no major AI-related listed company and lacks a domestic semiconductor manufacturing ecosystem. Venugopal Garre, managing director and head of India research at Bernstein, told CNBC that Indian IT firms remain anchored to services delivery and labor-cost advantages rather than capital-intensive, higher-risk technology development. That positioning leaves the country largely sidelined from the theme currently commanding the biggest global capital flows.

Background: A Decade-Long Bull Run Stalls

For nearly ten years through 2024, India ranked among Asia’s top-performing equity markets. Just 18 months ago, its market cap stood at 3.5 times that of South Korea and more than double that of Taiwan, according to Bernstein analysts. Nitin Jain, chief executive of Kotak Mahindra Asset Management Singapore, told CNBC the country’s narrative has flipped from a must-own market to one investors actively avoid.

Weak Earnings and Sticky Valuations Drive Outflows

Analysts caution that AI’s absence is not the sole problem. Sridhar Sivaram, investment director at Mumbai-based Enam Securities, pointed to stretched valuations and sluggish earnings growth as the deeper issue. Indian households are contending with elevated inflation, a depreciating rupee, and slowing job creation. Rising input costs tied to the Middle East conflict are expected to further compress corporate earnings through March 2027. Foreign investors have now sold $27.6 billion in Indian equities since January, already exceeding the full-year 2025 outflow of $18.9 billion, per data from depository NSDL.

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