South Korea surpasses India as world's 6th largest equity market

South Korea has recently surpassed India to become the World's sixth-largest equity market, driven by the rally in AI chipmakers. This comes just a few days after Taiwan overtook India's equity market in Market Cap. The total market capitalisation of Korea's listed companies has crossed 86 per cent in 2026 to $5 trillion, while India's listed companies have shrunk from their peak valuation of $5.66 trillion in September 2024 to $4.8 trillion. This is despite India's nominal GDP of $4.15 trillion being more than twice that of South Korea at $1.93 trillion, and a growth rate of 6.5 per cent that eclipses South Korea's modest growth rate of 1.9 per cent. This is a fascinating development for AI investors as both Taiwan and South Korea surpass India, Canada and other European countries, marking their influence on the AI economy.

What is driving the equity market of South Korea?

The equity market of South Korea is largely driven by Samsung Electronics and SK Hynix. Both companies recently joined the exclusive $1 trillion valuation club driven by the demand for memory chips used in AI applications and data centres. South Korea's benchmark Kospi index is heavily concentrated, essentially a proxy for the semiconductor sector. These two companies account for roughly 52 per cent of the index weight, similar to TSMC, which accounts for almost 40per cent of Taiwan's Taiex index. These make the equity market heavily dependent on the AI boom. The growth of South Korea and Taiwan has fascinated investors, while a global macro pullback or an oversupply in the semiconductor chip will result in a correction in both the benchmark index, Kospi, and Taiex.

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Why is India underperforming?

According to a Reuters poll, India's underperformance is partly due to its lack of participation in the AI-led rally, or absence from the AI hardware market. This adds further to the Foreign Portfolio investors who find other Southeast Asian markets providing more lucrative growth. The big Indian tech giants like the Tata Consultancy Services, Infosys, Wipro and HCL Technologies are providing AI-integration services for clients. India is almost entirely absent from the race of foundational models and the hardware companies. This has led to the steepest drop in 15 years and will end the year with its first annual decline since 2015.