Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Taiwan’s stock market has overtaken the UK’s in total value, making it the world’s seventh largest as the AI investment boom drives demand for chips made by Taiwan Semiconductor Manufacturing Company.
Taiwanese equities’ total market capitalisation hit $4.13tn on Thursday, ahead of the UK’s $4.09tn, according to a Bloomberg dataset that counts actively traded, primary-listed securities on a country’s exchange.
Taiwan’s market has been supercharged by AI service providers that depend on chips produced by TSMC, which makes up 45 per cent of the country’s entire market capitalisation.
“This is the tech and AI supercycle,” said William Bratton, head of cash equity research for Asia-Pacific at BNP Paribas.
The crossover came as TSMC, the world’s largest contract chipmaker, reported record first-quarter earnings. Net income jumped 58 per cent year on year to NT$572.5bn ($18bn), ahead of analysts’ forecasts. Revenues rose 35 per cent to NT$1,134.1bn.
The AI boom has driven TSMC shares up almost a third so far this year to an all-time high. The chipmaker said in January it would accelerate capital spending to meet AI demand, as customers have had to grapple with shortages.
“We are using multiple levers to do everything we can wherever we can however we can to maximise the support to our customers across all platforms,” said CC Wei, TSMC’s chief executive.
He expected full-year revenue to increase by more than 30 per cent, exceeding the company’s previous forecast.
A large portion of Asia’s market gains over the past year have been driven by TSMC and South Korean chipmakers Samsung and SK Hynix.
“The UK and most of Europe doesn’t really have anything exposed to this tech supercycle in listed equities aside from ASML,” said Bratton. “If the AI rally continues, Korea is the story and it could overtake the UK too.”
South Korea’s total market capitalisation, according to the Bloomberg dataset, stands at $3.7tn. The US, China, Japan, Hong Kong, India and Canada are ahead of Taiwan.
The dataset mainly reflects domestic companies and does not include secondary listings, depositary receipts or exchange traded funds. London’s broader financial market remains larger than that of Taiwan.
Meanwhile, the UK’s FTSE 100 index is up 6.1 per cent year to date, compared with the Taiex’s 26.5 per cent gain.
TSMC on Thursday said its capital spending would be “towards the high end” of a $52bn-$56bn range this year, as Big Tech companies such as Nvidia continue to push chip suppliers to increase their production capacity.
