Investors Shift $21B From India to AI-linked Taiwan, Korea

Global investors have withdrawn a net $21 billion from Indian equities so far in 2026, cutting India’s weight in the MSCI Emerging Markets index to about 12% from roughly 19% a year earlier, according to index provider data.

Goldman Sachs estimates foreign ownership of Indian equities is at a 14-year low and now trails domestic institutions for the first time in more than two decades. Asset manager M&G Investments estimates roughly two-thirds of the recent reallocation reflects investor positioning for AI exposure rather than short-term earnings weakness.

Since India’s market value peaked near $5.73 trillion in September 2024, roughly $924 billion has been erased from Indian equities. By contrast, Taiwan’s TAIEX has risen about 42% year-to-date and South Korea’s KOSPI has set fresh highs, exchange data show.

Together, Taiwan and South Korea have added several trillion dollars in equity value over the past year as investors bought companies tied to AI hardware, including chipmakers, packaging firms and other component suppliers.

Leading beneficiaries of the inflows include Taiwan Semiconductor Manufacturing Co., Samsung Electronics and SK Hynix, which supply semiconductors and memory used in large-scale AI systems. Listed companies in India have limited exposure to those hardware supply chains.

The rotation into AI-linked assets has appeared in new benchmark products, including an S&P Global index that pairs large-cap stocks with AI-linked digital tokens.

Generative AI developments have coincided with losses in India’s technology sector. The Nifty IT index has fallen about 26% in 2026 while the broader Nifty 50 is down close to 9% for the year, according to market data. Tata Consultancy Services and Infosys reached fresh 52-week lows after OpenAI announced a new enterprise deployment unit.

Analysts warn that generative AI tools can automate coding, testing and back-office tasks that support margins at traditional outsourcing firms. About 15 million people work in India’s IT services and global capability centers.

Indian policymakers have announced semiconductor incentives, plans to expand data-center capacity and a national AI mission intended to boost domestic capabilities and attract investment.