The surge in artificial intelligence has propelled the semiconductor industry into a historic upcycle, fueling significant gains in several Asian stock markets. Driven by soaring valuations of global memory giants Samsung Electronics and SK Hynix, the South Korean stock market has risen to become the world's sixth-largest by market capitalization, surpassing India. This shift occurred just after the Taiwanese market overtook India to claim the fifth spot the previous Monday.
As of June 1st, South Korea's market capitalization reached $5.04 trillion, exceeding India's $4.84 trillion. The Taiwanese stock market's capitalization stands at $5.15 trillion. The top four markets remain the United States, mainland China, Japan, and Hong Kong.
These changes highlight stark performance divergences across Asian markets. South Korea's benchmark KOSPI index has surged over 100% year-to-date, while Taiwan's TAIEX has gained more than 55%, ranking them among the world's best-performing major markets. In contrast, Indian equities have fared much worse. As of June 1st, the Sensex and Nifty indices are down 12% and 15% respectively for 2026, with the market struggling since late September 2024 due to high valuations, weak earnings, and persistent foreign investor selling.
Key Drivers of the Rally
The rapid ascent is primarily fueled by the boom in artificial intelligence and semiconductors. Companies like TSMC, Samsung, and SK Hynix have reported substantial profit growth. Semiconductor and high-bandwidth memory (HBM) related firms now constitute nearly 60% of the total market capitalization in both the South Korean and Taiwanese markets.
According to HSBC data, in 2004, Taiwan's stock market ranked only 12th globally with a capitalization of around $500 billion, while South Korea was 13th with about $400 billion. By the end of last year, South Korea's KOSPI had risen 75.6% for the year, pushing its market cap to approximately $2.7 trillion and a global rank of ninth. The market then skyrocketed, breaking through the $5 trillion mark in just five months to become the world's sixth-largest.
Unprecedented Pace of Change
Global investment strategist Billy Leung of Global X ETFs noted that the unusual aspect of the recent shifts in global market cap rankings is their speed and the singularity of the driving factor. While adjustments among the top ten markets occur nearly every economic cycle, they are typically driven by domestic economic booms, large IPOs, or years of outperformance.
June Chua, Head of Asia Equities at Manulife Investment Management, emphasized that the South Korean and Taiwanese stock markets have effectively become proxies for the semiconductor and AI industries, respectively.
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