SEBI Chairman Downplays Market Diversification Concerns Amid Shift in Global Market Capitalizations

Taiwan Overtakes India in Market Capitalisation, SEBI Chairman Notes Concentration

On May 26, SEBI Chairman Tuhin Kanta Pandey commented on Taiwan's recent surpassing of India in total stock market value, driven largely by a sharp rally in shares of chipmaking giant Taiwan Semiconductor Manufacturing Co.

According to Bloomberg data, Taiwan's market capitalisation rose to $4.95 trillion as of Monday, edging past India's $4.92 trillion. The island's equity market is now the world's fifth largest, behind the US, mainland China, Japan, and Hong Kong.

The Taiex Index slipped 0.3% on Tuesday, although it remains among the best-performing global benchmarks this year with gains of more than 50%. Shares of TSMC ended 1.7% lower.

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Taiwan's rise in the global market rankings has been largely fuelled by TSMC, which accounts for nearly 42% of the benchmark index, underlining the market's heavy concentration. The chipmaker's stock has surged 49% this year amid strong investor enthusiasm around artificial intelligence, where the company holds a dominant position in semiconductor manufacturing.

The rally in Taiwan's equities reflects broader optimism surrounding AI, which has sparked a global surge in technology stocks and disproportionately benefited manufacturing-focused markets such as Taiwan and South Korea.

Despite overtaking India in market capitalisation, Taiwan's economy remains significantly smaller. Indian equities have come under pressure this year due to record foreign investor outflows amid stretched valuations and a weakening rupee. Rising energy prices have also fuelled inflation worries and weighed on growth expectations.

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The ongoing global rally in artificial intelligence (AI) stocks is reshaping equity market rankings across countries, Pandey said. He pointed to the sharp rise in valuations of semiconductor and AI-linked companies globally.

The market's focus on AI-related investments has led to significant changes in market valuations, with companies directly or indirectly involved in AI development experiencing exceptional investor interest.