(Bloomberg) -- China, India, and Hong Kong have emerged as the only major stock markets worldwide where top companies account for a smaller share of market capitalization than a year ago, underscoring their lag in the global AI race.
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In both China and India, the ten largest companies in each nation now account for about 19% of total market capitalization, down respectively from 26% and 22% a year ago, according to Bloomberg‑compiled data. Hong Kong remains the least top‑heavy market, with big-company concentration slipping to 9.8% from 10%, though the city is largely shaped by financials and mainland-firm listings.
Not coincidentally, these markets' benchmarks have largely underperformed, especially compared to Taiwan and South Korea, where a few AI stars have lifted entire benchmarks. The data show while diversity can be a strength, it can also leave markets behind when fast‑emerging sectors like AI are underrepresented.
"Asia's concentration story is split," said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. "In the tech-heavy markets, AI and memory winners are driving index concentration higher. But in India, China and Hong Kong, concentration is falling because there is no single dominant AI winner."
The markets dominated by a handful of players tied closely to the AI supply chain have surged. Taiwan's benchmark, riding chiefly on chipmaker giant Taiwan Semiconductor Manufacturing Co.'s gains, has risen 54% this year, while Korea's Kospi index, powered by high-bandwidth memory leaders SK Hynix Inc. and Samsung Electronics Co., has roughly doubled.
These firms' influence on their markets — extensive even before they emerged as key AI suppliers — is expanding. In South Korea, the top 10 companies now account for about 65% of the market, about twice their share a year ago. Taiwan, which was already the most top-heavy market in Asia, also saw its top-10 companies' concentration grow to 56% from 49% a year ago.
Diversified Setup
Few markets in Asia illustrate the lag in the AI race as clearly as India. The Nifty 50 benchmark, down about 8% this year, is dominated by legacy giants such as Reliance Industries and HDFC Bank. Even its leading tech firms, such as Tata Consultancy Services and Infosys Ltd., are rooted in traditional software services now seen as vulnerable to disruption from AI.