AI Rally Propels South Korea and Taiwan Past India in Global Stock Market Rankings

Once the darling of emerging-market investors, India’s equity market has tumbled two spots in global rankings in just over a week, ceding its fifth-place standing to Taiwan and, as of early June, falling behind South Korea to seventh. The swift reshuffling of the world’s largest stock exchanges by market capitalisation encapsulates a broader rotation of global capital away from consumption-driven economies and toward the suppliers of artificial intelligence infrastructure.

Viewed from Seoul, the ascent of South Korea’s market has been nothing short of meteoric. Its aggregate listed value has rocketed 86% this year to $5 trillion, vaulting past not only India but also Canada and leading European bourses. Samsung Electronics and SK Hynix, each recently joining the exclusive club of companies valued above $1 trillion, have acted as twin engines. The rally confirms the peninsula’s strategic role as a critical node in the AI supply chain, reinforcing a bullish sentiment that has drawn global funds into the Kospi.

From New Delhi and Mumbai, however, the picture is starkly different. After years of robust foreign inflows that propelled India’s market to record highs, overseas investors have staged a dramatic retreat. Aggregate net investments by foreign portfolio managers in Indian shares have fallen to their lowest level since 2016, effectively erasing a decade’s worth of accumulated equity placements. The oil shock triggered by the US-Iran war has darkened the economic outlook for the world’s fastest-growing major economy, compounding the drag from a weakening rupee and sobering earnings growth. Indian equities, now worth $4.8 trillion, have slipped from being an emerging-market beacon to a market trailing not only its Asian rivals but also facing scepticism from global allocators.

Analysts in London and New York note that the divergence reflects more than fleeting market noise. It underscores a structural shift in investor preferences: capital is chasing economies directly tied to the AI build-out, rewarding the concentrated manufacturing power of Taiwan Semiconductor Manufacturing Co. and South Korea’s memory-chip duopoly. While India boasts a thriving technology services sector, it lacks comparable hardware giants supplying the physical infrastructure of the AI revolution. The simultaneous decline of India’s market and the surge of its chipmaking neighbours represents a re-rating of national economic models in the age of machine intelligence.

Whether India can reclaim its lost ground depends on its ability to staunch the outflow of foreign capital and to articulate a compelling narrative of participation in the AI value chain. For now, the gravitational pull of the semiconductor super-cycle shows no sign of abating, keeping the spotlight firmly on the Korean peninsula and Taiwan. The episode serves as a stark reminder that in global equity markets, yesterday’s favourites can quickly become tomorrow’s afterthoughts.