AI stocks are propelling Taiwan past China to gain the highest weighting in emerging market stock indices for the first time in nearly 20 years.
Strong buying in AI and semiconductor stocks has propelled Taiwan to the top spot as the weighted market in the MSCI Emerging Markets index, surpassing China for the first time in nearly 20 years, reflecting its role as a global technology hub.
On February 2, 2026, at 11:24 AM, Bloomberg News reported that: Taiwan has overtaken China to become the most weighted market in the emerging market index for the first time in nearly 20 years. Driven by gains in artificial intelligence (AI) stocks.
The latest data indicates that as of the end of January... Taiwan accounts for 21.06% of the MSCI Emerging Markets Index, surpassing China's 20.93%. This marks the first time Taiwan has outweighed China since July 2550, reflecting the continued inflow of capital into technology and AI stocks.
Taiwan's upward movement underscores the prominence of the AI theme and the company's role in the global technology supply chain, particularly Taiwan Semiconductor Manufacturing Co., the top-weighted stock in the emerging markets index, which has risen about 13% since the beginning of the year. This contrasts sharply with China, which continues to face pressure from weak consumer demand and uneven economic recovery.
The MSCI Taiwan index rose more than 11% in January, compared to a gain of around 5% in the MSCI China index. Although Chinese stocks remain undervalued in terms of earnings, the market expects earnings for companies included in the MSCI Taiwan index to grow 37% over the next 12 months, significantly higher than the 15% forecast for China.
Previously, strategists at Citigroup Inc. upgraded their rating on Taiwanese stocks to “Overweight” due to earnings prospects and AI supply chain connectivity, while downgrading their rating on Chinese stocks to “Neutral” due to weak earnings and economic outlook.
Meanwhile, South Korea, another Asian semiconductor hub, surpassed India to become the third-largest market in the emerging markets index, driven by rising memory prices, sending shares of Samsung Electronics Co. and SK Hynix Inc. to new record highs. While India still has a story of structural growth, its participation in advanced technologies remains limited, resulting in it benefiting less from the AI trend.
However, fund managers warn that while Taiwan's strategic role in global portfolios is increasing, it also makes those portfolios more vulnerable to volatility in the technology or AI cycle, should such trends slow down in the future.
refer : www.bloomberg.com
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