Chipmaking behemoth Taiwan Semiconductor Manufacturing Co (TSMC) has expanded its lead over India in the widely tracked MSCI Emerging Market (EM) index, positioning itself to attract more flows from passive funds than the near $5-trillion domestic market.
According to the latest factsheet released by the index provider, TSMC has a weightage of 14.2 per cent in the MSCI EM index, 227 basis points more than India’s weightage of 11.94 per cent, which is at its lowest in over six years.
TSMC first overtook India in February, when India saw its worst monthly selloff since the Covid pandemic. On the other hand, TSMC — seen as the main play for the AI trade in EM — has consolidated its lead amid a revival in euphoria around tech and AI investment.
Thanks to TSMC, Taiwan has overtaken China as the top weight in the MSCI EM index, which is estimated to be tracked by passive flows with assets of more than $750 billion, making it the most popular investment vehicle for investors seeking emerging market exposure.
Taiwan’s weightage in the index has soared to 24.84 per cent following a 40 per cent rally in Taiex and TSMC. Its weight was less than 15 per cent in 2023.
At its peak, India’s weight in the index climbed to 20 per cent in 2024. Since then, India has underperformed the MSCI EM index by over 50 percentage points.
Most foreign brokerages are currently overweight South Korea and Taiwan, seen as key beneficiaries of the AI supply chain and offering relatively more attractive valuations compared to India, which is now a consensus “underweight”.
TSMC’s high weightage in the MSCI EM index has stoked concerns over rising concentration in the index.
Acadian Asset Management flagged this concern in a note in December.
“TSMC now has the largest weight held by any single company in MSCI’s EM Index over the past 30 years. Consequently, the benchmark has become more concentrated than ever, more so than even during the run-up of Chinese mega-caps after Covid,” it said.
Punching above its weight
Source: MSCI; Note: Data as on April 30, 2026; *TSMC is part of Taiwan
