Taiwan stock market faces liquidity gap between AI giants and SMEs

The Taiwan stock market is experiencing a widening liquidity gap between large-cap stocks and small-to-medium enterprises (SMEs). Currently, the top 50 companies account for approximately half of the market's total liquidity, leaving over 1,900 other companies to share the remainder. This concentration is driven by the rise of passive investing and ETFs, which naturally favor large-cap stocks that are easily included in major indices.

The AI wave has further intensified this divide. Approximately 80% of the companies that have recently crossed the $2 billion USD market capitalization threshold are related to the AI supply chain, such as chips, servers, and cooling systems. Consequently, non-AI companies—even those with stable profits and strong fundamentals in sectors like healthcare or agriculture—face valuation downgrades and reduced institutional interest due to a lack of research coverage and visibility.

To address these challenges, the Taiwan Stock Exchange has upgraded its IR engagement platform to help investors discover undervalued companies through quantitative screening. Meanwhile, in the retail sector, financial tools like the ‘Dahu Tou’ app by SinoPac Securities are introducing smart selection strategies, such as tracking ETF inflows and momentum rankings, to help individual investors navigate rapid sector rotations and avoid high-price traps.