Taiwan overtook India in stock market value, powered mainly by a breakneck rally in the world¡¯s largest chipmaker Taiwan Semiconductor Manufacturing Co.

The island¡¯s market capitalization climbed to $4.95 trillion as of Monday, according to data compiled by Bloomberg. India¡¯s value has dropped to $4.92 trillion. Taiwan¡¯s stock market is now the fifth largest in the world, behind only the U.S., mainland China, Japan and Hong Kong.

Taiwan¡¯s ascent up the global equity rankings is largely driven by TSMC, which now accounts for more than 42% of the benchmark index, representing intense market concentration. The chipmaker¡¯s shares have rallied 49% this year as it has benefited from the artificial intelligence trade, in which its semiconductors have a dominant market position.

The surge in Taiwan¡¯s market value, contrasted with India¡¯s decline, highlights the two dominant themes shaping financial markets in 2026. One: surging oil prices from the 51³Ô¹ÏÍø are weighing heavily on the growth outlook for nations that depend on energy imports, such as India. And two: fierce AI optimism is triggering a global rally in tech shares, disproportionately benefiting manufacturing hubs such as Taiwan and South Korea.

¡°Taiwan¡¯s rising market capitalization is fundamentally a reflection of its heavy concentration in tech hardware, which is currently at the center of the AI investment cycle,¡± said Yi Ping Liao, a fund manager at Franklin Templeton. ¡°Markets with limited exposure to tech hardware are increasingly being overshadowed by tech hardware-heavy markets such as Taiwan and Korea.¡±

New regulations are also in TSMC¡¯s favor. Taiwan¡¯s financial regulator last month increased the limit that domestic funds can invest in a single stock. Under the new guideline, funds that invest solely in Taiwanese stocks can hold up to 25% of their net assets in any listed company whose weighting exceeds 10% in the Taiwan Stock Exchange, up from a previous limit of 10%. Currently, only TSMC meets the criterion.

The change may help lure in more than $6 billion of inflows to Taiwan, JPMorgan Chase?said in a research note.

While Taiwan has overtaken in market value, India¡¯s $4.15 trillion-dollar economy ¡ª among the fastest growing in the world ¡ª still trumps the island¡¯s $977 billion gross domestic product, according to International Monetary Fund estimates.