Global investors are increasingly favoring artificial intelligence (AI) stocks, leading to a surge in Taiwan and South Korea's equity markets and pushing them ahead of India in global market rankings within a single week [1]. Major AI-driven gains in companies such as TSMC, Samsung, and SK Hynix have propelled their valuations to over a trillion dollars, while India's lack of a significant AI-related stock has left it trailing its peers [1].
Foreign investors have sold $27.6 billion worth of Indian equities since January 2026, a sharp increase compared to the $18.9 billion sold in all of 2025, according to data from the Indian depository NSDL [1]. This exodus is attributed to weakening domestic consumption in India, higher inflation, a depreciating rupee, and increased input costs due to the Middle East conflict, all of which are expected to slow corporate earnings for the financial year ending March 2027 [1].
Taiwan's market capitalization reached nearly $5 trillion, surpassing India to become the world's fifth-largest equity market on May 26, 2026. Within a week, South Korea also overtook India, moving it down from sixth place, based on data from the three exchanges [1]. The Korea Exchange's KOSPI index closed at a record high of 8,788.38 on June 1, 2026, up 312.23 points or 3.68% from the previous session [1]. Year-to-date, Korea's Kospi 200 has gained over 130%, and Taiwan's FTSE TWSE 50 is up over 60%, outperforming all other Asian markets [1].
According to Nitin Jain, chief executive and director of Kotak Mahindra Asset Management Singapore, the narrative around India's equity market has shifted dramatically in less than two years, from being the best-performing market to one that investors are now avoiding [1]. Jain emphasized that AI is a 'very powerful theme,' and as long as companies in this sector continue to receive earnings upgrades, investors are unlikely to shift their focus to other markets [1].
CONCLUSION
The rapid rise of AI-focused stocks in Taiwan and South Korea has reshaped Asia's market hierarchy, with India losing its previous dominance due to a lack of major AI plays and weakening domestic fundamentals. Foreign investor outflows and slowing corporate earnings further dampen India's outlook, while AI remains the key driver for market leadership in the region.