South Korea overtakes India as world's sixth-largest stock market

South Korea’s stock market has overtaken India to become the world’s sixth-largest equity market by value. (AI image)

In yet another setback, South Korea’s stock market has overtaken India to become the world’s sixth-largest equity market by value. Last week, India was overtaken by Taiwan to become the fifth largest stock market. Within a week, India has fallen from sixth to the seventh rank.

In the cases of both South Korea and Taiwan, the stock market rally is fuelled by a powerful surge in semiconductor giants that are benefiting from the global artificial intelligence boom. According to data compiled by Bloomberg, the combined market value of companies listed in South Korea has climbed 86% this year to reach $5 trillion. In contrast, India’s market capitalisation has slipped to about $4.8 trillion.

The sharp rise in Korean equities has been led by Samsung Electronics and SK Hynix, both of which recently crossed the $1 trillion valuation mark. Their leadership in AI memory-chip technology has helped propel the Kospi index to gains of more than 100% in 2026. South Korea has also overtaken several major markets this year, including Canada, Germany, the UK and France.

Ross McGarry, Senior Investment Analyst at Asset Value Investors, said South Korea’s catch-up with India marks a significant achievement for a market that until recently viewed the Kospi 5,000 level as an ambitious long-term goal. However, he noted that much of the rally has been driven by the semiconductor cycle, with Samsung and SK Hynix accounting for a large share of the gains. According to him, the sustainability of the market’s re-rating will depend on whether broader corporate governance reforms can take hold.

India’s market, meanwhile, has faced headwinds from a weakening rupee, sustained foreign investor withdrawals and a relatively limited presence of companies directly tied to the AI infrastructure theme. Despite the shift in stock market rankings, India remains the larger economy. International Monetary Fund estimates place India’s gross domestic product at $4.15 trillion, compared with South Korea’s GDP of $1.93 trillion. India also continues to rank among the fastest-growing major economies in the world.

Last week, Taiwan moved ahead of India in terms of stock market capitalisation, helped largely by the extraordinary rise of Taiwan Semiconductor Manufacturing Co. (TSMC), the world's biggest contract chipmaker. The latest shift placed Taiwan as the world's fifth-largest stock market, behind only the United States, China, Japan and Hong Kong.

Much of Taiwan's rise in the global rankings can be traced to TSMC's outsized influence on the local market. The company now represents around 42% of the benchmark index, underscoring the high concentration within Taiwan's equity market. TSMC shares have surged 46% so far this year, driven by strong investor enthusiasm for artificial intelligence and the company's dominant position in semiconductor manufacturing.

The rally highlights how the AI-led boom in technology stocks has disproportionately benefited economies with deep exposure to advanced chip production, particularly Taiwan and South Korea.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.)