Britain’s stock market eclipsed by Taiwan on AI boom

Britain’s stock market has been eclipsed by Taiwan as the island’s tech firms benefit from an AI boom.

The total value of all Taiwan-listed companies rose to $4.14tn (£3tn) on Wednesday, climbing above the UK market, which is valued at $4.09tn.

It follows an AI-fuelled surge in valuations of companies in the country. Taiwan Semiconductor Manufacturing Co (TSMC), the chip manufacturer that accounts for nearly 40pc of the value of Taiwan’s market, bounced back to record highs after a momentary dip driven by the Iran war.

The chip giant reported a 35pc increase in quarterly revenue this week. It said it expects sales to grow by almost a third in dollar terms this year. Demand for TSMC chips has been bolstered by the boom in AI spending, which the war in Iran has done little to dent.

Meanwhile, the country’s Taiex index has shrugged off the impact of Middle East disruption. Earlier this week, it erased all the losses it had accrued since the war started on Feb 28.

Taiwan’s market is the latest in a series to have overtaken the UK. Back in 2023, India’s market surpassed Britain’s, thanks to its rapid economic growth, and Canada’s market, which has a similar reliance on banks and commodities, has also jumped in front of the UK.

Twenty years ago the UK’s value was double Canada’s and triple India’s.

It comes amid wider concerns that London’s public market is losing ground to its rivals. Since 2021, there have been few major listings in the UK and a number of major businesses have instead moved their main listings abroad. Over the past decade, the number of companies listed in London has shrunk by a quarter.

Wise, the UK’s second-biggest tech company, announced it would move its listing to the US in June last year, while Flutter Entertainment, the gambling group, made the shift in 2024.

The UK’s FTSE 100 has risen by less than 4pc this month, as concerns about inflation and high interest rates have held back British businesses.

In its latest World Economic Outlook, the International Monetary Fund (IMF) cut its estimate for UK growth this year to 0.8pc, from the 1.3pc prediction made in January before the Iran war began.

The IMF said its downgrade was because of the war, which would lead to fewer interest rate cuts and higher energy prices. As a net importer of energy, the UK remained especially sensitive to a rise in energy prices, the fund said.

The downgrade was the largest of the world’s advanced economies, with the UK economy now expected to grow less than France, Canada and the US, but more than Japan and Italy. The UK is also expected to have the joint highest inflation in the G7 this year at 3.2pc.