Taiwan is now the fifth largest stock market in the world, and one stock accounts for 42% of it

Taiwan's stock market has now become the fifth largest stock market in the world, with its market capitalization nearing $5 trillion as a breakneck rally in semiconductor stocks and AI-related plays propelled its benchmark index to new highs.

As of Monday's close, Taiwan's overall market capitalization stood at $4.95 trillion. The market is now only behind the US, mainland China, Japan and Hong Kong in market cap terms. India ranks sixth in the list, with a market capitalization of $4.92 trillion.

However, Taiwan's surge towards the top five has majorly been driven only by one stock - Taiwan Semiconductor Manufacturing Company (TSMC), which now comprises of 42% of the weightage on the benchmark index, showing intense concentration.

TSMC shares are up 50% so far in 2026, benefitting from the AI trade, where its semiconductors enjoy a dominant status.

The AI rally has disproportionately benefitted manufacturing nations like Taiwan and South Korea, whose on benchmark KOSPI is already up 87% so far in the first five months of the year.

New market regulations are also helping TSMC and the stock price move. Taiwan's financial regulator last month increased the limit that domestic funds can invest in a single stock. Under the new rules, funds that invest only in Taiwanese stocks can hold up to 25% of their net assets in any listed company whose weightage exceeds 10% in the Taiwanese Stock Exchange, higher than the earlier limit of 10%. The only stock that currently meets this criteria, is TSMC.

According to a JPMorgan note, the change could help inflows worth another $6 billion into Taiwan.