Taiwan surpasses UK in stock market value due to AI chip boom: FT

Taiwan's stock market is now valued as the world's seventh largest by total market capitalisation of its listed companies, overtaking the UK.

Total market capitalisation in this case refers to the combined market value (price) of all outstanding shares of publicly listed companies in a country's stock exchange.

On Apr. 16, Taiwan's total market capitalisation hit US$4.13 trillion (S$5.27 trillion), compared to the UK's US$4.09 trillion (S$5.22 trillion), reported the Financial Times (FT), citing data from a Bloomberg dataset.

Taiwan's climb has been fuelled by the artificial intelligence (AI) investment boom, which has driven up demand for chips made by the Taiwan Semiconductor Manufacturing Company (TSMC).

AI chip boom

According to FT, Taiwan's rise is heavily dependent on TSMC, which makes up 45 per cent of its entire market capitalisation.

TSMC is the world’s largest contract chipmaker and reported record first-quarter earnings.

According to a TSMC press release on Apr. 16, the firm reported a consolidated revenue of NT$1,134.1 billion (S$45.89 billion), a year-over-year first-quarter increase of 35.1 per cent.

The firm's net income of NT$572.48 billion (S$23.16 billion), a 58.3 per cent increase, said TSMC.

In the press release, Senior VP and Chief Financial Officer of TSMC, Wendell Huang, said, "Our business in the first quarter was supported by strong demand for our leading-edge process technologies".

FT reported that the AI boom has caused TSMC's shares to increase by almost a third, an all-time high, as customers grappled with shortages.

TSMC's chief executive, CC Wei, said he expected full-year revenue to increase by more than 30 per cent, exceeding previous forecasts, reported FT.

Asia's market gains attributed to chipmakers

According to FT, a major portion of Asia's market gains over the last year have been fuelled by chipmakers such as TSMC and South Korea's Samsung and SK Hynix.

Head of cash equity research for Asia-Pacific at BNP Paribas, William Bratton, said, “The UK and most of Europe don’t really have anything exposed to this tech supercycle in listed equities aside from ASML."

“If the AI rally continues, [South] Korea is the story and it could overtake the UK too.”

Based on the Bloomberg dataset that FT cited, South Korea's total market capitalisation is US$3.7 trillion (S$4.72 trillion).

The current ranking in descending order is as follows: U.S., China, Japan, Hong Kong, India, Canada, Taiwan, UK.

FT noted that London’s broader financial market remains larger than Taiwan's.

According to FT, Bloomberg's dataset does include secondary listings, depositary receipts or exchange-traded funds.

The dataset mainly reflects domestic companies.

Top photo from TSMC Museum of Innovation/Google Maps and Lisanto/Unsplash