China, India, and Hong Kong have emerged as the only major stock markets worldwide where top companies account for a smaller share of market capitalisation than a year ago, according to Bloomberg-compiled data. In both China and India, the ten largest companies now account for about 19 per cent of total market capitalisation, down respectively from 26 per cent and 22 per cent a year ago. Hong Kong remains the least top-heavy market, with big-company concentration slipping to 9.8 per cent from 10 per cent, though the city is largely shaped by financials and mainland-firm listings. As noted by CNBC TV18, this concentration decline has significantly impacted market performance, with these markets' benchmarks largely underperforming compared to Taiwan and South Korea.
The concentration decline has significantly impacted market performance, with these markets' benchmarks largely underperforming compared to Taiwan and South Korea. While diversity can be a strength, it can also leave markets behind when fast-emerging sectors like AI are underrepresented. As explained by CNBC TV18, Charu Chanana, chief investment strategist at Saxo Markets in Singapore, noted that "Asia's concentration story is split." In tech-heavy markets, AI and memory winners are driving index concentration higher, while in India, China and Hong Kong, concentration is falling because there is no single dominant AI winner. Not coincidentally, these markets' benchmarks have largely underperformed, especially compared to Taiwan and South Korea where a few AI stars have lifted entire benchmarks.
Markets dominated by AI supply chain companies have surged dramatically. Taiwan's benchmark has risen 54 per cent this year, riding chiefly on chipmaker giant Taiwan Semiconductor Manufacturing Co.'s gains. Korea's Kospi index has roughly doubled, powered by high-bandwidth memory leaders SK Hynix Inc. and Samsung Electronics Co. The top 10 companies in South Korea now account for about 65 per cent of the market, about twice their share a year ago, while Taiwan's top-10 companies' concentration grew to 56 per cent from 49 per cent a year ago. As reported by CNBC TV18, these firms' influence on their markets — extensive even before they emerged as key AI suppliers — is expanding significantly.
India illustrates the lag in the AI race more clearly than any other Asian market. The Nifty 50 benchmark, down about 8 per cent this year, is dominated by legacy giants such as Reliance Industries and HDFC Bank. Even leading tech firms such as Tata Consultancy Services and Infosys Ltd., rooted in traditional software services, are seen as vulnerable to AI disruption. According to CNBC TV18, the top-weighted names are no longer pulling the index as strongly, while the next tier has yet to generate a replacement engine. However, Siddharth Vora, fund manager and head of asset management at PL Capital, noted that the same diversity could provide stability if investors judge the AI spending cycle overheated and global investors turn to markets with robust earnings across multiple sectors. "In a sharper correction, India would not be immune, but its lower concentration, domestic liquidity, and wider earnings base could offer relative resilience," he added.
In China, where authorities and internet giants are vowing to ramp up AI investments, the picture is more complicated. The largest companies are conglomerates with mixed revenue streams, but some of the best-performing stocks this year are those positioned to directly monetise the AI boom, such as intelligent processor maker Cambricon Technologies Corp., semiconductor foundry SMIC and optical fiber maker Yangtze Optical Fibre & Cable Joint Stock Ltd. As reported by CNBC TV18, Fabien Yip, a market analyst at online brokerage IG International, noted that investors have diverted attention to companies with clearer association to AI. There is also investor rotation underway that may prove healthy, with capital flowing into banks, insurers, high-dividend state-linked names, hardware makers, as well as AI-adjacent stocks. That broader participation helps explain why China has still delivered positive returns despite the declining market-cap share of its top ten companies, with the CSI 300 Index rising about 5 per cent this year.
