Taiwan's stock market capitalization rose to about US$4.95 trillion as of May 25, 2026, surpassing India's US$4.92 trillion to become the world's fifth largest market behind the US, mainland China, Japan and Hong Kong [1, 2, 3, 4].
The rise in Taiwan’s market value was led by Taiwan Semiconductor Manufacturing Co. (TSMC), which accounts for roughly 42% of the Taiwan Stock Exchange benchmark index. TSMC’s shares have surged approximately 49% in 2026, boosted by strong demand tied to the artificial intelligence boom [1, 2, 3, 4].
Taiwan’s financial regulator increased the limit on domestic funds investing in a single stock from 10% to 25% of net assets in April 2026, applying to companies that weigh more than 10% in the stock index. TSMC is currently the only company qualifying under this rule. This regulatory change may attract more than US$6 billion of inflows into the Taiwanese stock market, according to JPMorgan Chase estimates [1, 2, 4].
Fund manager Yi Ping Liao at Franklin Templeton said, "Taiwan’s rising market capitalisation is fundamentally a reflection of its heavy concentration in tech hardware, which is currently at the centre of the AI investment cycle." She added that markets with limited tech hardware exposure are being overshadowed by Taiwan and Korea, which benefit from the AI investment surge [1, 2, 4].
In contrast, India's stock market has faced headwinds from rising energy costs, slow corporate earnings growth, and a lack of companies directly connected to the AI buildout. Its economy size is about US$4.15 trillion, substantially larger than Taiwan’s GDP of approximately US$977 billion despite the stock market valuation gap [1, 4].
Taiwan’s market gains reflect its concentrated exposure to tech hardware, aligned with the current AI investment cycle, while India’s market remains weighed down by structural challenges [1, 2, 4].
The new investment limit for domestic funds took effect in April 2026 and the continued rally in TSMC shares will be watched for its impact on Taiwan’s market capitalization in the coming months [1, 2, 4].
