The Growing Influence of US Investors in Taiwan’s Equity Market
The Taiwan Stock Exchange has become increasingly intertwined with American capital, driven by the global artificial intelligence (AI) boom. This trend has led to a record influx of US investments into Taiwan’s semiconductor-heavy equity market, significantly boosting the presence of US investors in the region.
According to BNP Paribas, citing data from Treasury International Capital, US investors currently hold about 23% of the exchange’s total market capitalization, valued at approximately $668 billion. This figure represents a significant increase, with roughly $12 billion funneled into the market in 2025 alone. William Bratton, head of cash equity research for Asia-Pacific at BNP Paribas, noted that US ownership of Taiwan equities has been steadily rising over the past decade and is now at record highs.
A decade ago, US equity ownership stood at just 13%, reflecting a growing interest in securing exposure to Taiwan’s cutting-edge semiconductor industry. Bratton described this as “part of the current supercycle focused on AI enablers.” The semiconductor sector plays a pivotal role in Taiwan’s economy, with chipmakers and tech hardware suppliers dominating the benchmark Taiex index. Semiconductor firms account for more than 60% of the total market value, with Apple and Nvidia supplier Taiwan Semiconductor Manufacturing Company (TSMC) representing over 40% of the index.
TSMC’s shareholder base highlights the cross-border dynamics between US investors and the company. Bloomberg data shows that US investors make up roughly 35% of TSMC’s stakeholders, including major asset managers such as Vanguard Group, BlackRock, and JPMorgan. This level of participation underscores the deepening ties between the two markets.
Part of the rise in US exposure can be attributed to Taiwan’s rapid market-cap expansion rather than a deliberate overweighting, according to a report by Cathay United Bank (CUB). The AI-driven surge in Taiwan’s semiconductor and AI-related stocks has pushed the index higher, leading to an expanded market value of around $3.9 trillion as of late February 2026. This places Taiwan’s equity market as the seventh largest globally, with potential to overtake the UK market soon.
As Taiwan’s weight in global indices increased, US portfolios followed suit. Fourth-quarter US Treasury data showed that US investors stepped up their purchases of Taiwan equities toward the end of the year, even as buying of Japanese equities slowed.
Addressing concerns over heavy foreign participation, Ally Chen, a Taiwan analyst at Swiss bank UBS, noted that daily market turnover remained largely driven by domestic retail investors despite record levels of foreign institutional ownership.
Retail participation has grown in recent years, especially through exchange-traded funds (ETFs), which have gained popularity among income-focused investors. Taiwan’s ETF market ranked third in Asia last year, indicating a strong appetite for diversified investment options.
Nonetheless, the scale of US ownership highlights Taiwan’s exposure to shifts in American sentiment. Given the high level of US participation, Taiwan equities could be sensitive to any meaningful shift in US investor positioning. Bratton of BNP Paribas warned that if sentiment were to reverse, a dramatic shift by US investors to sell in the market could occur.
The closer capital linkage also signals a broader economic realignment. In 2025, the US overtook mainland China and Hong Kong to become Taiwan’s largest export market for the first time since 1999, according to official data. This growth bolstered a broader economic momentum, with Taiwan’s economy expanding by 8.63% in 2025—the island’s fastest annual expansion in 15 years.
At present, the Taiwan market’s fundamentals remain supportive, providing room for US and other foreign investors to gradually increase their portfolio weightings. UBS analyst Chen suggested that if earnings growth continues at its current pace, investors may tend to allocate more in Taiwan compared to other regions. However, she cautioned that if AI investments cooled, this could have knock-on effects for semiconductors and other tech hardware.
