Taiwan Surpasses Korea in AI Stock Market Trading

Taiwan has surpassed Korea in AI stock trading, demonstrating significant growth in the stock market. In the last quarter, Taiwan's TAIEX index exceeded Korea's KOSPI index by 23 percentage points, marking the largest gap since the beginning of the 21st century. For the first time since March 2025, Taiwanese companies have also outperformed Korean companies in earnings forecasts. According to a survey conducted by Bank of America last month, 40% of asset managers reported having an overweight position in the Taiwanese market, while only 25% preferred Korean stocks. The main reason for such optimism is Taiwan's closer integration into the AI supply chain and more positive earnings forecasts.

Vikas Pershad, a portfolio manager at M&G Investments in Singapore, noted: “The difference for us is not just in the level of interest in artificial intelligence, but in the nature of the profits that support it.” Taiwan offers broader opportunities, which explains the steady growth in profits and forecasts. At the same time, Korean profits in the short term largely depend on prices. A comparison of the indicators of both countries also shows that Korea's market position is currently largely concentrated in the hands of leading chip manufacturers such as Samsung and SK Hynix, making it more vulnerable to market fluctuations. TAIEX has become one of the best-performing stock indices this year, increasing by 72% in 2026, while KOSPI grew by 65%. Meanwhile, Samsung and SK Hynix shares fell by 19% and 33% respectively over the three months ending in September.

Strategists at Societe Generale, led by Rajat Agarwal, stated that they prefer Taiwanese stocks over Korean ones, considering the differences in profitability growth trajectories. They believe that chip price growth is expected to slow down in the coming quarters and then return to normal levels by 2028. Peter Lee, managing director at Citigroup, co-heading global technology and telecommunications research, said last week that investors should start buying Samsung and SK Hynix shares as the market underestimates the volume of HBM memory needed in 2027. TAIEX is estimated to trade at about 18x forward earnings, while KOSPI trades at about 5.5x, reflecting concerns about a near peak in the memory cycle and partly the 'Korean discount'. In the Bank of America survey, 35% of respondents chose Taiwan as the country that will benefit the most from the next phase of the AI cycle, while only 5% pointed to Korea. TSMC increased its shares by 2.9% in the last quarter, marking the sixth consecutive quarter of growth, and about 10% of TAIEX shares have doubled this year compared to 4.1% for KOSPI and 5.7% for Nikkei 225.