Taiwan overtakes India to become world’s fifth-largest stock market

Taiwan has overtaken India to become the fifth-largest stock market in the world, driven by the significant surge in the revenue of the semiconductor giant Taiwan Semiconductor Manufacturing Company. According to Bloomberg, Taiwan's stock market capitalisation reached $4.95 trillion in market capitalisation, overtaking India at $4.92 trillion, behind only the US, China, Japan and Hong Kong.

What is driving Taiwan's rise?

Taiwan's meteoric rise is driven by the Taiwan Semiconductor Manufacturing Company (TSMC), which now accounts for 42 per cent of the benchmark index TAIEX or Taiwan Stock Exchange Capitalisation. The chipmaker's shares have rallied 46 per cent this year, driven by the massive demand in the AI ecosystem, which many analysts are terming as the “NVIDIA proxy effect”. NVIDIA does not manufacture its own hardware; it designs chips. It is reliant heavily on TSMC for its hardware manufacturing. Every time NVIDIA secures a multibillion-dollar contract, its revenue flows into TSMC, triggering immediate and massive rallies. While Foxconn assemble the complex physical AI servers and AI factories that house NVIDIA's components. Taiwan's financial regulator recently changed the regulation about domestic funds that invest in a single stock can hold up to 25 per cent of their net asset in any listed company, up from the previous 10 per cent. This will further attract investors to TSMC.

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Is India really falling behind?

India is falling behind in total market capitalisation of its stock market, mostly driven by the record outflow in the Foreign Institutional Investors, driven by the rising crude oil prices and a depreciating Indian domestic rupee. It has lost $380 billion in market cap from its peak valuation of $5.3 trillion in January 2026. The Benchmark NIFTY 50 has fallen by 8.08 per cent, while the BSE Sensex has fallen by 10.8 per cent. However, Wall Street is divided on the valuation of Taiwan and AI buildout. Analysts view the Indian market valuation as more grounded in long-term national growth compared to Taiwan's highly concentrated, hyper-rewarding technology bets.