India, China Among Countries Lag in Global AI Race, Leading to Market Cap Share Decline for Largest Firms

India, China, and Hong Kong are the only major markets where the largest companies have seen a decrease in their market capitalisation share over the past year, reflecting a lag in the global AI sector, as per a Bloomberg report. 

Market Capitalisation Decline in India and China 

In India and China, the 10 largest companies now account for about 19% of total market capitalisation, down from 22% and 26% respectively a year ago.  

Hong Kong's concentration has also decreased slightly to 9.8% from 10%. This trend contrasts with Taiwan and South Korea, where AI-driven companies have boosted market indices. 

AI Influence in Taiwan and South Korea 

Taiwan's benchmark has risen 54% this year, largely due to Taiwan Semiconductor Manufacturing Co., while South Korea's Kospi index has nearly doubled, driven by SK Hynix Inc. and Samsung Electronics Co.  

In South Korea, the top 10 companies now represent 65% of the market, up from 32% a year ago. Taiwan's top-10 concentration has increased to 56% from 49%. 

Diversified Market Structure in India 

India's Nifty 50 benchmark, down about 8% this year, is dominated by traditional giants like Reliance Industries and HDFC Bank. Leading tech firms such as Tata Consultancy Services and Infosys Ltd are more focused on traditional software services, which are now vulnerable to AI disruptions. 

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China's Complex Market Dynamics 

As per the report, in China, large companies are conglomerates with diverse revenue streams. However, stocks like Cambricon Technologies Corp., SMIC, and Yangtze Optical Fibre & Cable Joint Stock Ltd. have performed well due to their AI associations. The CSI 300 Index has risen about 5% this year, reflecting broader market participation beyond the top 10 companies. 

Conclusion 

India, China, and Hong Kong have seen a decline in market cap share for top firms, with India and China's top 10 companies now accounting for 19% of market capitalisation, down from 22% and 26% respectively. In contrast, Taiwan and South Korea have experienced growth due to AI-driven companies. 

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