A massive, AI-driven structural rotation is reshaping emerging market equities, triggering record foreign capital flight from India toward East Asia’s tech manufacturing hubs. Global funds have dumped nearly $24 billion of Indian equities so far this year, chasing a relentless artificial intelligence (AI) boom that has already allowed Taiwan to overtake India as the world's fifth-largest stock market. Now, South Korea looms as the next powerhouse poised to eclipse Mumbai, as major brokerages aggressively upgrade Seoul's market targets while warning that India’s lack of direct tech hardware exposure will leave its foreign inflows muted for years.
Data compiled by Bloomberg shows Taiwan’s market capitalization climbed to $4.95 trillion as of Monday, while India’s value dropped to $4.92 trillion. Driven by a 49% rally this year in Taiwan Semiconductor Manufacturing Co. (TSMC), Taiwan now sits behind only the US, mainland China, Japan, and Hong Kong. Meanwhile, India's key gauge is down 8%, heading for its first annual drop after a decade of gains, and its weight in the MSCI Emerging Markets index has collapsed from 19% last year to about 12%.
