(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.
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With its stock market now valued at nearly $4.3 trillion, Taiwan surpassed the United Kingdom, Europe’s 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.
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’s largest chip foundry, and South Korea’s leading memory makers Samsung Electronics Co. and SK Hynix Inc. European stock markets, meanwhile, are more heavily weighted toward financial firms.
“The rapid rise of Korea and Taiwan has been due to the long-term megatrend of semiconductors as ‘the new oil’ — the key input to economic activity — combined with the latest price-insensitive boom in AI investment,” said Ian Samson, a portfolio manager at Fidelity International. It demonstrates “the oligopolistic nature of leading-edge semiconductor manufacturing.”
Asia has cemented its central place in the world’s economy as AI develops and spreads, even amid concerns over the impact of tariffs and the Iran war. Taiwan’s March export orders surged at the fastest pace in 16 years, while South Korea’s exports rose more than 40% for a second-straight month, both fueled by robust chip shipments.
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.
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’s 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.
Tech Dominance
“This trend can broadly be viewed as a divergence between technology and non-technology sectors,” said Eva Lee, head of Greater China equities at UBS Global Wealth Management. “While 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.”
