South Korea's Kospi index has surged roughly 80% in 2026, while Taiwan's stock market gained about 40% this year, fueled by growth in AI-related semiconductor firms [1]. Taiwan's total market valuation reached an estimated $4.5 to $4.7 trillion, making it the world's sixth-largest stock market, overtaking Canada [1, 2]. South Korea's market valuation is around $4.4 trillion, ranking eighth globally and surpassing the U.K. [1, 2].

The key drivers behind both markets' strength are semiconductor giants TSMC in Taiwan, and Samsung Electronics and SK Hynix in South Korea. TSMC alone accounts for more than 40% of Taiwan's market capitalization [2]. In South Korea, Samsung Electronics and SK Hynix together make up approximately 42.2% of the Kospi index [2].

Experts attribute these gains primarily to AI infrastructure demand. Florian Neto of Amundi said, "The main driver is the AI build-out story" [1]. Tim Moe, Goldman Sachs Asia-Pacific equity strategist, noted, "It's the AI hardware theme that's clearly what is propelling things" [2]. June Chua of Manulife Investment Management observed that "Both indices have effectively become AI and semiconductor proxies" [2].

However, the sharp rise came with volatility. In May, South Korean equities faced heavy foreign investor outflows totaling about $13 billion, triggering a sharp drop [2]. The Kospi briefly entered technical correction territory but rebounded later in June amid ongoing market swings and labor tensions at Samsung Electronics, where workers are demanding a greater share of AI-driven profits [1].

Charu Chanana, chief investment strategist at Saxo Markets, said, "Korea and Taiwan had become very crowded expressions of the AI infrastructure boom, so once inflation concerns pushed yields higher and US tech momentum wobbled, investors took profits where gains had been strongest. But I would not say this reshapes the fundamental investment narrative" [1]. Billy Leung of Global X ETFs added that the rapid market reshuffling is unusual given the narrow set of drivers focused on semiconductor stocks [2].

The AI boom has rapidly reshaped the regional equity landscape. A market top 10 reshuffle normally takes years or is driven by broad domestic growth or large IPOs. Instead, the AI hardware theme has propelled key players to dominate market valuations within months [2]. South Korea and Taiwan's vital position in the global chip supply chain reinforces their market momentum for 2026 [1, 2].