Taiwan's Stock Market Becomes the World's Fourth Largest! Alex Lee: The AI Hidden Gem Everyone Overlooked Three Years Ago Is Now Taking Center Stag
Forum Center / Comprehensive Report
Although Taiwan's stock market suffered its third-largest single-day decline in history on Friday, its total market capitalization climbed to US$5.22 trillion over the same week, making it the world's fourth-largest equity market.
In an interview, Lee Hung-chi, CEO of Quantifi Research, noted that foreign investors now own approximately 47% of Taiwan's equity market, describing it as an ideal balance that has transformed Taiwan's stock market into "a vast ocean" for global capital.
Lee also highlighted the "Hidden Gem Index" (璞玉指數), launched earlier this year, which tracks 331 companies with consistent profitability and dividend payouts. Compared with many AI-related stocks, the index features lower volatility and more attractive valuations, making it a complementary investment strategy alongside the AI trend.
He encouraged Taiwanese companies to be more proactive in communicating their value to international investors.
"Don't worry that foreign investors can't see you. Make sure they do. That's how a hidden gem transforms into a diamond."
Image. (Photo: FTV News)
Taiwan's stock market suffered its third-largest single-day decline in history on Friday, catching many investors off guard. Yet in the very same week, the Taiwan Stock Exchange's total market capitalization climbed to US$5.22 trillion, making it the fourth-largest equity market in the world, behind only the United States, China, and Japan—a testament to the depth and resilience of Taiwan's capital market.
An overview of the key characteristics of companies selected for the Taiwan Hidden Gem Index. (Source: QIC Presentation Slide)
Against a backdrop of heightened market volatility and capital increasingly concentrated in a handful of high-profile AI stocks, the Taiwan Hidden Gem Index, launched earlier this year, has attracted growing attention.
Alex Lee , who previously held positions at leading domestic and international brokerage firms—including BZW (Barclays de Zoete Wedd, Credit Suisse First Boston, Deutsche Securities, and Yuanta Securities—shared the value of the Taiwan Hidden Gem Index from the perspective of foreign institutional investors. (Source: Screenshot)
In an exclusive interview with Formosa TV Decision Maker, Alex Lee, Founder and CEO of QIC, said that the structure of Taiwan's stock market today is fundamentally different from what it was five or ten years ago.
Image (Photo: FTV News)
Foreign investors now hold 47% of Taiwan's equity market, while domestic institutional investors and retail investors each account for roughly 10% to 20% of market ownership. According to Lee, this creates an "ideal ownership mix"—one that combines long-term capital with ample market liquidity and is rarely seen anywhere else in Asia.
With long-standing experience in foreign investor relations, Alee Lee shared the unique characteristics of Taiwan’s capital market from the perspective of global institutional investors. (Source: Screenshot)
He emphasized that Taiwan’s stock market is no longer a small regional market, but rather a “vast ocean,” where a wide range of trading strategies can find room to survive and operate.
Image. (Photo: FTV News)
Regarding the Hidden Gem Index, Alex Lee believes it does not conflict with the dominant AI investment theme. While AI continues to show clear growth momentum, he noted that when capital becomes overly concentrated in a small group of stocks, some investors will naturally look for more stable, dividend-oriented alternatives. The Hidden Gem Index, he said, is designed to meet precisely this type of demand.
Alex Lee noted that the Taiwan Stock Exchange’s introduction of an index-based concept helps smaller and mid-cap Taiwanese companies gain visibility among foreign investors. (Source: Screenshot)
The index selects 331 mid-tier companies with three consecutive years of profitability and stable dividend payouts. These firms tend to exhibit lower volatility and lower valuation levels, making the index suitable for conservative investors as part of diversified asset allocation strategies.
Alex Lee noted that many of today’s highly successful AI companies were themselves “hidden gems” in their early stages.
He also called for the Hidden Gem Index to serve as a labeling mechanism for high-quality Taiwanese mid- and small-cap companies, urging stronger domestic and international promotion so that global investors can better recognize and access them.
AI-driven growth and the “Hidden Gem” concept illustration, symbolizing how hidden gems can eventually turn into diamonds. (Source: Screenshot)
He pointed out that foreign investors do not focus solely on large-cap stocks. In fact, over the past two to three years, many non-weighted index companies have also attracted foreign investor interest. The key factor, he said, lies in whether companies are willing to actively strive for growth and clearly articulate their future strategies.