Why Taiwan and South Korea’s stock markets have surged past India

Hello, this is Priyanka Salve, writing to you from Singapore.

Welcome to the latest edition of  “Inside India“ — your one-stop destination for stories and developments from the world’s fastest-growing large economy.

AI-driven gains in TSMC, Samsung and SK Hynix, plus a weaker rupee and headwinds from the Middle East conflict are reshaping Asia’s market rankings. This week, I explore how the AI theme is outshining India’s consumption story.

Read on!

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In 2026, animal spirits are driving investments in artificial intelligence firms, valuing stocks such as TSMC, Samsung and SK Hynix at over a trillion dollars.

For the world’s fastest-growing major economy, India — which has no large-scale AI play — this is bad news, especially at a time when its highly sought-after domestic consumption story is cracking, according to experts CNBC spoke to. Households are facing higher inflation, weaker currency, and a slowdown in quality job creation.

This decline in consumer spending and an increase in input costs due to the conflict in the Middle East is also expected to slow down corporate earnings in the financial year ending March 2027, the experts said, adding that it is making foreign investors even more eager to exit.

Foreign investors have sold Indian equities worth $27.6 billion since January, compared with a total of $18.9 billion in 2025, per data from the Indian depository NSDL.

Meanwhile, the market capitalization of India’s peers is soaring. Taiwan’s market cap touched nearly $5 trillion as it surpassed India to become the world’s fifth-largest equity market on May 26. Within a week, South Korea too pushed ahead of India, overthrowing it from sixth place, based on data compiled from the three exchanges.

It seems tables have turned against India, sharply.

Roughly 18 months ago, India’s equity market cap stood at 3.5 times that of South Korea and more than twice that of Taiwan, according to Bernstein analysts in a note published Monday.

For nearly a decade until 2024, India was one of the best-performing markets, according to Nitin Jain, chief executive and director of Kotak Mahindra Asset Management Singapore. In less than two years, the narrative has shifted from India “being the best story to a story which nobody wants to even think about,” he told CNBC.

On a year-to-date basis, Korea’s Kospi 200 has gained over 130% while Taiwan’s FTSE TWSE 50 is up over 60%,…