The key reason is simple — tech stocks. Both South Korea and Taiwan are technology giants, with leading companies in memory chips and semiconductor engineering that the UK does not have. Just two companies, Samsung and Hynix, benefiting from the surge in memory chip demand, account for 40% of the Korean Kospi stock index capitalisation. Similarly, the formidable Taiwan Semiconductor Manufacturing Company, the top manufacturer of nano-tech semiconductors, has a market cap of US$2.1 trillion and accounts also for 40% of the Taiwan Stock Exchange’s market capitalisation, weighing in at roughly 2.1 times Taiwan’s GDP.
Finance is a derivative of the real sector. Global bond markets reflect largely the credit-borrowing requirements of governments, whereas stock markets reflect the top companies that generate profits and innovation to support the economy’s competitive standing. While advanced countries (mostly the West, and Japan) have sizeable bond markets, the US stands out for the vigour and liquidity of its two stock markets, the New York Stock Exchange (NYSE) and Nasdaq, as well as its digital platforms for trading in financial products, including derivatives.
The most remarkable change in recent months is the news that the Taiwan and South Korean stock markets have both overtaken the UK in market capitalisation, at around US$4 trillion ($5.1 trillion), depending on stock prices. Those of us who trained in the UK still consider the country great in education. Still, its GDP ranking has continued to decline, from global No 2 at the height of the British Empire (second only to the US) to sixth position at US$3.7 trillion. South Korea has grown to US$1.88 trillion (about half the UK’s size) and Taiwan to US$0.8 trillion (roughly one-fifth the UK’s size). Notably, the UK has roughly 69 million to 70 million people, while South Korea has a population of 52 million and Taiwan 23 million, roughly three-quarters and one-third of the UK’s, respectively.
