Asia’s stock markets overtake the UK and Canada – and why it matters to you

Taiwan’s rise has been driven overwhelmingly by Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest advanced chipmaker and a critical supplier to companies including Nvidia, Apple and AMD. TSMC has become one of the principal beneficiaries of the AI boom, as demand for advanced processors continues to accelerate across data centres, cloud computing and consumer devices.

South Korea has similarly benefited from strong gains in Samsung Electronics and SK Hynix, both key suppliers of memory chips used in AI infrastructure. Investors have increasingly viewed semiconductor manufacturers as central to the next phase of global economic growth, pushing valuations sharply higher across the sector.
 

By contrast, the UK and Canadian markets have struggled to keep pace. London remains heavily weighted towards financials, oil majors, mining groups and consumer staples companies, sectors that have delivered relatively modest growth compared with technology shares.

The UK market has also faced persistent structural challenges. A lack of large-scale domestic technology companies, subdued valuations and a steady flow of businesses seeking US listings have weakened London’s position among global equity markets².

Canada’s stock market, meanwhile, remains closely tied to commodities and financial services, leaving it less exposed to the AI-driven rally that has reshaped global investor sentiment over the past 18 months³.

While the rankings themselves can fluctuate with currency movements and market volatility, the broader trend is becoming increasingly clear: global investors are assigning greater value to economies positioned at the centre of the semiconductor supply chain.

The shift also highlights the growing strategic importance of chip production. Semiconductors are now viewed not simply as a technology sector, but as critical infrastructure underpinning artificial intelligence, defence systems and industrial competitiveness.
 

The development underlines the extent to which global equity leadership is being reshaped by AI-related themes. Markets with significant exposure to semiconductor manufacturing and advanced technology are attracting higher valuations, while more traditional income-oriented markets risk being left behind.

However, the shift extends beyond Taiwan and South Korea alone. Emerging markets now encompass 24 countries spanning Asia, Latin America, Eastern Europe, the Middle East and Africa, with many benefiting from long-term structural trends including digitalisation, rising consumer wealth, urbanisation and artificial intelligence investment.

India, for example, has become one of the world’s fastest-growing major economies, supported by domestic consumption and manufacturing expansion, while China continues to dominate electric vehicles, renewable energy technology and e-commerce infrastructure.

According to IMF forecasts, 22 of the world’s 24 emerging market economies are expected to grow faster than the UK over the coming year, highlighting the increasingly important role developing economies are playing in global growth⁴.

The emergence of Taiwan and South Korea ahead of long-established Western markets is therefore about more than league-table positioning. It signals a deeper reordering of global capital markets around technology, innovation and the infrastructure powering the AI economy.

1. Emerging markets now account for over 40% per cent of global GDP, compared with less than 25 per cent in the early 1990s, reflecting the growing economic influence of developing economies⁵. 
2. Many global indices like FTSE All-World are vastly overweight to the US with around 10% attributed to emerging markets.  This can leave many global investors underexposed to businesses in the world’s fastest growing economies and heavily concentrated. Read more:  Global index investors, beware!
3. Taiwan’s benchmark stock index has risen more than 80 per cent since the start of 2023, fuelled largely by global demand linked to artificial intelligence infrastructure⁶. 
4. The majority of global growth is generated by emerging markets – and that’s forecast to grow to around 75% by 2029.  
5. There’s more to emerging markets.  China is the world’s second-largest economy and India is expected to become the world’s third-largest economy within the next decade, overtaking both Germany and Japan, according to several long-term forecasts⁷
    

For investors looking to access these long-term growth themes without selecting individual companies, professionally managed emerging market portfolios can provide diversified exposure across regions and sectors.

Templeton Emerging Markets Investment Trust (TEMIT), for example, invests in around 80 companies spanning the full emerging markets universe. TEMIT is the first and largest emerging markets investment trust in the UK and has been delivering returns for shareholders for more than 35 years.

Test before you invest: Check out the investment calculator to see what TEMIT would have delivered for you.

Importantly, TEMIT’s portfolio includes many of the businesses benefiting from structural trends such as artificial intelligence, semiconductor demand and rising middle-class consumption across the full range of emerging economies.

Holdings including Taiwan Semiconductor Manufacturing, SK Hynix and Samsung Electronics demonstrate how active managers can gain exposure to the companies helping to drive the next phase of global economic growth, while maintaining diversification across multiple emerging markets like China, India and Brazil.