Investors Pull $21B From India as AI Bets Boost Taiwan, Korea

Global investors withdrew a net $21 billion from Indian equities in 2026, shifting weight in the MSCI Emerging Markets index from about 19% a year ago to roughly 12% today. The reallocation favored markets tied to artificial intelligence infrastructure rather than the services companies that dominate India’s equity market.

Goldman Sachs calculates foreign ownership of Indian equities is at a 14-year low and now trails domestic institutions for the first time in more than two decades. Index-provider data show India’s market value peaked near $5.73 trillion in September 2024; roughly $924 billion of market value has been erased since that peak. M&G Investments estimates about two-thirds of the capital redirected into other Asian markets reflects positioning for AI exposure.

Taiwan and South Korea captured much of the outflow. Taiwan’s TAIEX has gained about 42% year-to-date, while South Korea’s KOSPI has reached fresh highs. Together the two exchanges added several trillion dollars in market value over the past year. The gains were led by companies that supply processors and memory for AI systems, including TSMC, Samsung Electronics and SK Hynix.

The shift has hit India’s information-technology sector. The Nifty IT index has fallen roughly 26% in 2026, and the broader Nifty 50 has declined close to 9% this year. Tata Consultancy Services and Infosys recorded 52-week lows after announcements from major AI platform providers about enterprise deployments of generative models that automate coding, testing and back-office tasks. About 15 million people work in India’s IT services and global capability centers.

Investors have expanded interest into products that combine equities with AI-linked crypto tokens. S&P Global launched a hybrid product pairing large-cap stocks with leading AI-related tokens, reflecting demand for new ways to gain exposure to AI themes beyond traditional hardware stocks.

Indian authorities have announced measures to boost domestic AI and semiconductor capacity, including semiconductor incentives, plans to expand data center capacity and a national AI mission intended to attract local investment and infrastructure buildout. Trading and index-weight changes show the reallocation of capital has been rapid and concentrated in specific sectors and markets.