Taipei: Taiwan's stock market has outperformed those in Japan and South Korea over the past four years, driven by significant growth in artificial intelligence hardware, a sector in which Taiwan's economy excels, the country's central bank reported recently.

According to Focus Taiwan, the central bank highlighted that the Taiwan Stock Exchange's benchmark index, the Taiex, has surged approximately 120 percent from a low of 12,666 points in 2022 to reach 27,867 by December 15, 2025. This increase outpaced the 103 percent rise in Japan's Nikkei 225 index and the 89.8 percent rise in South Korea's KOSPI Composite Index since 2022, despite those markets also hosting numerous technology stocks.

The central bank attributed the stock market growth to the AI boom and the abundant liquidity resulting from the loose monetary policies of the U.S. Federal Reserve and other major central banks. It noted that the tech-heavy Nasdaq index in the United States has been the top performer globally over the past four years, with a rise of about 125.8 percent since 2022.

Taiwan's Taiex has benefited notably from the AI surge, given the country's significant production of AI chips and its dominance in AI server assembly, accounting for 90 percent of global assembly. Despite concerns about a potential AI investment bubble, the central bank expressed confidence in the continued expansion of AI applications from cloud services to end users, with global efforts to develop Sovereign AI further broadening the market.

Citing a report by the government-sponsored Industrial Technology Research Institute, the central bank projected the global AI market to expand at a compound annual growth rate (CAGR) of 32 percent from 2024 to 2029, reaching US$1.26 trillion by 2029. The report indicated an even higher CAGR of 56 percent for generative AI (GenAI) alone during the same period.

The central bank acknowledged that AI applications for end-users require more time to mature, which could introduce downside risks for the global supply chain and create uncertainty for Taiwan's economy. However, it emphasized that market corrections will happen over time, and the ongoing evolution of AI technology is expected to support long-term economic growth.