Introduction
In late May 2026, Taiwan overtook India to become the world's fifth-largest stock market. And within seven days, South Korea did the same, pushing India from 5th to 7th in terms of global rankings.
With that, India's market cap has slipped to around $4.8 trillion, while Taiwan and South Korea have each crossed $5 trillion.
So, “With $1.3 trillion wiped out on Friday, how does it affect Indian stock markets?”
Keep reading to find all your answers.
From why the South Korean and Taiwanese markets are booming to why the 2026 AI crash happened recently, this blog covers it all.
Countries Exposed to AI Stocks & Technology (2026)
Before looking at how the South Korean and Taiwan stock markets are dominating, let us learn how global positioning is in 2026.
Here’s a breakdown of the top 10 countries exposed to AI stocks or similar technology in 2026:
| Rank | Country | AI/Tech Market Exposure % | Market Cap (2026) | Global Ranking | Why it Benefits |
| 1 | United States | AI innovation leader | $79.47 trillion | 1st largest | Home to major AI chip designers such as NVIDIA, AMD, Broadcom, and hyperscalers like Microsoft, Amazon, Google, and Meta. |
| 2 | China | AI patents & applications | $15.09 trillion | 2nd largest | Massive AI demand, growing domestic chip industry, and large-scale data-center investments. |
| 3 | Japan | Semiconductors + robotics | $8.63 trillion | 3th largest | Critical supplier of semiconductor materials, manufacturing equipment, and precision components. |
| 4 | Hong Kong | Tech trading hub | $7.24 trillion | 4th largest | Acts as a financial hub for Chinese technology companies and a gateway for global capital into China's AI sector. |
| 5 | Taiwan | Chip manufacturing | $5.15 trillion | 5th largest | Dominates advanced chip manufacturing through TSMC, which produces most leading-edge AI chips. |
| 6 | South Korea | Memory chips | $5.04 trillion | 6th largest | Home to Samsung Electronics and SK Hynix, key suppliers of HBM memory used in AI servers. |
| 7 | India | Software services only | $4.84 trillion | 7th largest | Limited, but benefits from AI software development, engineering talent, data-center growth, and emerging semiconductor manufacturing initiatives. |
| 8 | Canada | Limited tech exposure | $4.53 trillion | Below Taiwan | Gains from AI research leadership, data-center expansion, and technology firms, though exposure remains lower than major AI hubs. |
| 9 | United Kingdom | Software/AI research | $3.94 trillion | Below Korea | Strong in AI research, fintech, enterprise software, and venture capital funding for AI startups. |
| 10 | Germany | Energy + auto AI | $2.94 trillion | Below Japan | Benefits from AI adoption in manufacturing, industrial automation, etc. |
(Note: The "AI/Tech Market Exposure %" figures represent stock market concentration in AI/tech sectors, not global AI market share. These figures can help understand domestic stock market concentration, not international AI market dominance.)
Why Did Taiwan's & South Korea’s Stock Market Surge?
The major reason for the rise in the South Korean and Taiwanese markets is Artificial intelligence. Specifically, the chips that make AI work.
Here’s why the Taiwan and South Korea stock market rally occurred in 2026:
Taiwan has TSMC
Back in the 1970s, Taiwan established the Industrial Technology Research Institute (ITRI) and founded TSMC (Taiwan Semiconductor Manufacturing Company Limited) in 1987. It focused on pioneering the pure-play foundry model, manufacturing chips for other companies without designing them.
Now, TSMC itself manufactures roughly 72% of the world's advanced semiconductors. Every Nvidia AI chip, every Apple silicon processor, nearly every AI accelerator on earth is made in TSMC's factories.
In Q1 2026, TSMC posted $35.9 billion in revenue (up 35% year-on-year), and its market cap crossed $2 trillion. One company now makes up about 42% of Taiwan's entire stock market and 92% of global foundry output.
South Korea has Samsung Electronics and SK Hynix
In the 1960s, South Korea was a largely agriculture-based economy devastated by the Korean War. Later, government policies spurred the emergence of giants like Samsung and SK Hynix.
These two companies dominate the High Bandwidth Memory (HBM) chip market, the memory layer inside every AI server. Both have crossed $1 trillion in value this year. Together, they account for nearly half of South Korea's market cap.
When tech giants are spending over $200 billion on AI infrastructure in 2026–27, most of that money flows directly to these three companies. Hence, their stock markets rise with every data centre order.
This surge pushed Taiwan's market capitalization to $4.95 trillion, overtaking India to become the world's fifth-largest equity market, and South Korea's to approximately $5 trillion, becoming the sixth-largest. Meanwhile, India slipped from fifth to seventh position globally.
Why did the selloff happen in Asian Stock Markets?
A few days back, when South Korea and Taiwan were celebrating their lead victory, investors saw it as an opportunity to book their gains.
This selloff happened when the US chipmaker Broadcom issued a disappointing outlook last week. Likewise, a stronger-than-expected US job report gave hints that the US government may raise interest rates this year.
If the interest rates rise, the borrowing costs rise, causing the future earnings to become less valuable.
As a result, it raised concerns among investors related to AI-related earnings growth that may have become too optimistic.
Hence, the Asian stocks plunged on Monday as investors rushed to exit their investments in some of the market's most crowded AI bets. This move also triggered sharp declines across Taiwan, South Korea, and Japan, wiping billions of dollars off value.
Did India's Stock Market Get Affected from AI Stocks Sell-off?
Technically speaking, South Korea, Taiwan, and Japan have deep exposure to the global AI and semiconductor supply chain.
Compared to the South Korean and Taiwan stock markets, India acts opposite or is less dependent. Instead of selling AI infrastructure (chips from TSMC/Samsung), India sells AI-disruptive software services – reducing dependence on this technology.
Hence, when the AI boom occurred last week, the Asian countries rose to the top positions. This caused India to slip to 7th place, but it became an advantage later on.
As investors rushed to book gains in the Asian markets, the KOSPI index fell by 8.3% on Monday (8th June, 2026). Followed by other Taiwan stock market Index (TWSE by 6%) and Japan’s Nikkei to plunge by nearly 4% as well.
But, luckily, India acted as an insulator to the 2026 AI stock sell-off, terming itself as an “Anti-AI positioning” move. It means India does not bleed as heavily when the AI bubble jiggles.
Following Tuesday, all three AI-exposed markets came back to the positive territory.
Conclusion: Should Investors be concerned aboutAI Risk in Asia?
In the crust, the question of investor concern depends on how AI risks rely on how dependent the country is on the AI technology or any sector.
Lately, which felt like a disadvantage during a concentrated tech rally, turned out to be a genuine strength later on.
India's GDP growth is still the fastest among major economies. Considering the race, investors have moved to a sector where Taiwan and South Korea have decades of head start. Those countries spent 30+ years building semiconductor ecosystems; India is still developing.
But, all said, investing should come with research and your own understanding.
