Taiwan stock market outperforms Japan, South Korea

AI AUGMENTED: A national economic specialization on artificial intelligence and adjacent industries has pushed Taiwan further and faster than neighbors in recent years Taiwan’s stock market has outperformed markets in Japan and South Korea for the past four years because of the strong growth in artificial intelligence (AI) hardware, a particular strength of Taiwan’s economy, the central bank said.The central bank said the Taiwan Stock Exchange’s benchmark TAIEX index has risen about 120 percent from a low of 12,666 points in 2022 to 27,867 on Dec. 15.That gain beat out the 103 percent rise in Japan’s Nikkei 225 index and the 89.8 percent rise in South Korea’s KOSPI Composite Index since 2022, even if those markets also list several tech stocks, the central bank said in a report issued on Dec. 18.In addition to benefiting from the AI boom, these Asian stock markets were helped by ample liquidity generated by the loose monetary policies of the US Federal Reserve and other major central banks, the central bank said.The tech-heavy NASDAQ index in the US has been the best market performer in the world for the past four years, surging about 125.8 percent since 2022. Like the NASDAQ, the TAIEX has particularly benefited from the ongoing AI boom because Taiwan ships large quantities of AI chips and accounts for 90 percent of AI server assembly, the central bank said.Despite fears of an AI investment bubble, the central bank said it believed AI applications should continue to expand from cloud services to end users, and moves by many countries to intensify their development of sovereign AI should further expand the AI market.Citing a report by the government-sponsored Industrial Technology Research Institute, the central bank said that with generative AI growing at a fast pace, the global AI market would grow at a compound annual growth rate of 32 percent a year to reach US$1.26 trillion in 2029.The growth rate is expected to reach 56 percent for generative AI alone during he same period, the report showed.The central bank said AI applications for end-users still need more time to mature and downside risks are possible for the global supply chain, which could create uncertainty over the local economy.However, corrections should occur over time and the evolution of AI technology would evolve and pave the way for longer term economic growth, the central bank said.The TAIEX closed up 184.04 points, or 0.65 percent, at 28,556.02 on Friday.