The artificial intelligence boom has triggered a seismic reshuffling of global equity markets, with Taiwan and South Korea muscling past European nations one by one. According to reports from CNBC TV18, with its stock market now valued at nearly $4.3 trillion, Taiwan surpassed the United Kingdom, Europe's biggest market, earlier this month. South Korea is about $140 billion away from doing the same, with the tech-heavy Asian markets having shot past Germany and France in the past seven months.
The shift is largely down to massive gains in shares of three companies that provide essential hardware for AI: Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest chip foundry, and South Korea's leading memory makers, Samsung Electronics Co. and SK Hynix Inc.. As reported by CNBC TV18, TSMC shares have climbed more than 40% this year, while the Korean duo have surged more than 80% each. TSMC now ranks among the largest companies globally with its market capitalisation of $1.8 trillion, and the Korean pair combined at $1.5 trillion.
Asia has cemented its central place in the world's economy as AI develops and spreads, with Taiwan's March export orders surging at the fastest pace in 16 years and South Korea's exports rising more than 40% for a second-straight month, both fueled by robust chip shipments. According to CNBC TV18, investors have become more cognizant of this role, with TSMC, Samsung and SK Hynix known as key suppliers to AI kingpin Nvidia Corp.
While equity values have soared for the Asian chip powerhouses, their economies remain much smaller than Europe's largest nations. The International Monetary Fund estimates South Korea's gross domestic product at $1.9 trillion this year and Taiwan's at $977 billion, well below the $3 trillion-plus forecasts for Germany, the UK and France. As reported by CNBC TV18, Samsung and SK Hynix account for a combined 42% of Korea's Kospi equity benchmark, while TSMC makes up a similar proportion of Taiwan's Taiex on its own.
The AI story in Asia may seem narrow at the index level but is broader across the supply chain, according to JPMorgan Asset Management. While the largest companies are getting bigger, the opportunity set is also expanding as AI capex continues to trickle down. According to M&G Investments, domestic investors are playing an increasingly important role across Asia, with the market cap gains in Taiwan and South Korea seen as justified on a long-term view. The trend represents a divergence between technology and non-technology sectors, with Europe's heavier tilt toward mature sectors leading to slower market capitalisation growth compared to Asia's innovation advantages.
