AI boom: Global stock market order shuffles as Taiwan, South Korea overtake Western giants

The bulls and bears have brought in major surprises so far in 2026 as AI boom coupled with the ongoing Iran-US war led to a major reshuffling of the global stock market hierarchy, with South Korea and Taiwan overtaking several long-established Western exchanges.

South Korea’s Kospi has emerged as the shining star among all stock markets so far this year, skyrocketing to fresh lifetime highs last week while most of the global markets crashed. According to a report by The Financial Times, Kospi has more than tripled in less than 18 months, with this bull run outpacing tech-heavy Nasdaq’s bull run in the 1990s, just before the Dotcom crash.

Despite worries, South Korea has leapfrogged the UK into eighth place, according to HSBC data tracking global equity-market capitalisation rankings, as quoted by CNBC.

Late in April this year, another Asian market boomed. Taiwan’s stock market overtook Canada’s to become the world’s sixth-largest, helped by strong investor demand for artificial intelligence-related stocks and the sharp rise in shares of Taiwan Semiconductor Manufacturing Co. (TSMC).

Also Read | Taiwan overtakes Canada to become 6th largest stock market as AI demand lifts TSMC m-cap to $1.8 trillion

New global stock market order

Notably, Taiwan’s stock market was only the world’s twelfth largest in 2004 while South Korea ranked 13th, the report by CNBC further said, highlighting how the market order has changed over the years. Currently, the top 10 stock markets in terms of total market capitalisation, as per data by HSBC quoted by the report are as follows: US, China, Japan, Hong Kong, India, Taiwan, Canada, South Korea, UK and France.

While optimism around AI remains high, the report highlighted that the rally has led to an extreme concentration of capital into a handful of AI firms. TSMC alone accounts for over 40% of Taiwan’s market capitalization, while Samsung Electronics and SK Hynix together make up a record 42.2% of South Korea’s Kospi index, the report said.

Sustainable rally or a bubble?

South Korea’s sharp rally has made several investors draw parallels with the Nasdaq’s skyrocketing bull run in the initial stage of the Dotcom bubble crisis. In the 1990s, Wall Street was rallying sharply, with investors having no clue of the massive crash that was coming next. The Nasdaq index rose 86% in 1999 alone, and peaked on March 10, 2000. The rally in South Korea however seems more sustainable, FT quoted analysts as saying.

“What is different is that dotcom was very multiple driven, this has been very earnings driven so far,” the report quoted Cameron Chui, Asia equity strategist at JPMorgan Private Bank.

However, legendary investor Michael Burry, who famously predicted the 2008 housing collapse, said that the AI debt frenzy that led to the sharp surge in South Korea’s markets is beginning to mirror the dangerous excesses of the dot-com bubble.

Also Read | Michael Burry’s AI crash warning grows louder: Is Nvidia-driven hype and record venture capital funding pushing Wall Street toward another dot-com disaster?

Back home on Dalal Street…

Dalal Street had surpassed Hong Kong in late 2023 but later fell below it. The Indian stock market has seen massive foreign outflows so far this year, with analysts saying that these investors may be moving capital towards the AI-led markets. “Foreign outflows were driven by a host of factors like weak rupee and deceleration in earnings momentum…South Korea and Taiwan saw increased foreign interest as these offered bets on the AI and semiconductor theme at cheaper valuations,” Sriram Velayudhan, Senior Vice President of IIFL Capital Services said recently.

Also Read | FPI exodus in four months of 2026 surpasses all of last year

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