(Bloomberg) — 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.<\/p>\n
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With its stock market now valued at nearly $4.3 trillion, Taiwan surpassed the United Kingdom, Europe\u2019s biggest market, earlier this month, according to data compiled by Bloomberg. South Korea is about $140 billion away from doing the same. The tech-heavy Asian markets have shot past Germany and France in the past seven months.<\/p>\n
The shift is largely down to massive gains in shares of three companies that provide essential hardware for AI: Taiwan Semiconductor Manufacturing Co., the world\u2019s largest chip foundry, and South Korea\u2019s leading memory makers Samsung Electronics Co. and SK Hynix Inc. European stock markets, meanwhile, are more heavily weighted toward financial firms.<\/p>\n
\u201cThe rapid rise of Korea and Taiwan has been due to the long-term megatrend of semiconductors as \u2018the new oil\u2019 \u2014 the key input to economic activity \u2014 combined with the latest price-insensitive boom in AI investment,\u201d said Ian Samson, a portfolio manager at Fidelity International. It demonstrates \u201cthe oligopolistic nature of leading-edge semiconductor manufacturing.\u201d<\/p>\n
Asia has cemented its central place in the world\u2019s economy as AI develops and spreads, even amid concerns over the impact of tariffs and the Iran war. Taiwan\u2019s March export orders surged at the fastest pace in 16 years, while South Korea\u2019s exports rose more than 40% for a second-straight month, both fueled by robust chip shipments.<\/p>\n
Investors have become more cognizant of this role, with TSMC, Samsung and SK Hynix known as key suppliers to AI kingpin Nvidia Corp. TSMC shares have climbed more than 40% this year while the Korean duo have surged more than 80% each.<\/p>\n
TSMC now ranks among the largest companies in the world, with its market capitalization of $1.8 trillion, and the Korean pair combined at $1.5 trillion. Europe\u2019s largest company, chip-equipment maker ASML Holding NV, is smaller than all of them. In fact, the combined market cap of all technology stocks in the Stoxx Europe 600 Index stands at about $1.4 trillion.<\/p>\n
Tech Dominance<\/p>\n
\u201cThis trend can broadly be viewed as a divergence between technology and non-technology sectors,\u201d said Eva Lee, head of Greater China equities at UBS Global Wealth Management. \u201cWhile individual AI-related stocks in Europe have also delivered strong gains year-to-date, the impact is more pronounced in Korea and Taiwan due to the higher concentration of technology stocks.\u201d<\/p>\n
Story Continues <\/p>\n
While equity values have soared for the Asian chip powerhouses, their economies remain much smaller than Europe\u2019s largest nations\u2019. The International Monetary Fund estimates South Korea\u2019s gross domestic product at $1.9 trillion this year and Taiwan\u2019s at $977 billion, well below the $3 trillion-plus forecasts for Germany, the UK and France.<\/p>\n
To be sure, some investors have sounded caution about the outsized influence of tech stocks in Asia\u2019s markets, given their high weightings in local indexes. Samsung and SK Hynix account for a combined 42% of Korea\u2019s Kospi equity benchmark while TSMC makes up a similar proportion of Taiwan\u2019s Taiex on its own.<\/p>\n
AI investment is broadening, however, as the technology\u2019s increasing integration into people\u2019s everyday lives expands demand for all sorts of hardware and applications. TSMC\u2019s index weighting has actually come down from recent highs as stocks like MediaTek Inc. and Delta Electronics Inc. gain share.<\/p>\n
\u201cThe AI story in Asia may seem narrow at the index level but is broader across the supply chain,\u201d said Francesco Chan, an emerging markets and Asia Pacific investment specialist at JPMorgan Asset Management. \u201cWhile the largest companies are getting bigger, the opportunity set is also expanding as AI capex continues to trickle down.\u201d<\/p>\n
Having passed the UK, Taiwan\u2019s market value is now closing in on that of Canada, which has been expanding on gains in gold and other resource-related stocks. A little further up the rankings is India, whose equities have been slumping on higher energy prices as well as weakness in its banking and IT sectors.<\/p>\n
For now, Europe is losing its foothold on the leaderboard due to its relative lack of tech stocks.<\/p>\n
\u201cEurope\u2019s heavier tilt toward mature sectors has led to a slower trajectory in market capitalization growth,\u201d said Yi Ping Liao, a portfolio manager at Franklin Templeton. \u201cKorea and Taiwan \u2014 and broader North Asia \u2014 have built durable advantages in innovation, talent, and manufacturing scale, particularly in key growth sectors, continuing to attract global capital.\u201d<\/p>\n
Beyond institutional funds, the hard-charging Asian stock markets are also enjoying greater support from retail investors lured by the AI stock boom. South Korea is seeing a resurgence of loyal mom-and-pop traders known as \u201cants\u201d for their tendency to act in unison, while there\u2019s also been an upswing in retail participation in Taiwan.<\/p>\n
\u201cWe are seeing domestic investors playing an increasingly important role\u201d across Asia, said Vikas Pershad, an Asia equities portfolio manager at M&G Investments. Pershad added that he sees the market cap gains in Taiwan and South Korea as \u201cjustified\u201d on a long-term view.<\/p>\n
–With assistance from Michael Msika and Denny Thomas.<\/p>\n
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\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — The artificial intelligence boom has triggered a seismic reshuffling of global equity markets, with Taiwan and…\n","protected":false},"author":2,"featured_media":417394,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[220,218,219,7772,971,1813,37685,182968,61,60,182969,81767,541,2234,2073,9059,18413,80],"class_list":{"0":"post-417393","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-asian-markets","12":"tag-bloomberg","13":"tag-europe","14":"tag-european-nations","15":"tag-global-equity-markets","16":"tag-ie","17":"tag-ireland","18":"tag-portfolio-manager","19":"tag-sk-hynix","20":"tag-south-korea","21":"tag-stock-market","22":"tag-taiwan","23":"tag-taiwan-semiconductor","24":"tag-tech-stocks","25":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/417393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=417393"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/417393\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/417394"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=417393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=417393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=417393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}