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.
The number of South Korean listed companies has quadrupled from just over 600 in 2000 to 2,599 at the end of 2024, whereas Taiwanese companies have grown to just under 1,000. By comparison, listings in the London Stock Exchange (LSE) declined by 20%–30% since 2000 to just over 1,600 currently. The LSE remains a more traditional market comprising financials, real estate, mining and consumer products. In contrast, the South Korean and Taiwanese markets are driven by higher valuations and profits coming from technology companies. Ironically, the LSE Group is today seen more as a data and technology platform, with earnings from stock trading accounting for less than 10% of annual revenue. In contrast, fees from data and analytics generate most of the higher-margin income.
Partly, the lack of the tech component in the LSE market is due to UK start-ups avoiding listings there because of lower valuations, limited liquidity and better opportunities abroad, particularly in the US.
Some of the better-known UK tech companies, such as Wise, Arm and Eat Takeaway, shifted to the NYSE or Nasdaq for superior pricing, deeper capital pools, larger investor bases and higher multiples than on the London market. When post-IPO performance also shrinks, as seen in sharp price drops for UK listings like Deliveroo after flotation, shareholders may prefer a shift to the New York market.
See also: Asian stocks decline, led by Korea, oil climbs
What does that tell us about the importance of paying attention to the quality of corporations, the investor base and the whole ecosystem of stock markets and the real economy?
First, market liquidity has been driven by technological advancements such as electronic trading platforms and algorithmic trading, making it easier and faster for investors to buy and sell shares, reducing transaction costs and narrowing bid-ask spreads. With new exchange-traded funds and the tokenisation of assets, it is now possible for retail and institutional investors to adjust their portfolios quickly and cheaply by combining the right blend of assets and liabilities. This means that investors have become globally mobile, even though there is still significant home bias (sticking closer to what you know best rather than venturing into new fields you don’t understand).
Thus, the North Asian markets, such as China (mostly Shenzhen), Japan, South Korea and Taiwan, offer many listings of technology companies, whereas, from a geopolitical and geo-economic perspective, investors have been more cautious about Europe and the UK. Most investors cannot avoid the US market because of the quality of companies and its dominant size and liquidity.
See also: Oil climbs as US-Iran deadlock lifts bond yields
Despite the wide-ranging uncertainties brought by the Iranian war, the US S&P 500 has hit record highs, with the trailing S&P 500 P/E ratio at 25.8 times as of April 27, above the historical average of around 19.4 times since 1971. The S&P 500 is 5.7 times higher than its level at the end of 2010.
Nobel Laureate Robert J Shiller became famous for his work on asset bubbles and behavioural finance, and his Shiller CAPE (Cyclically Adjusted Price–Earnings) ratio, which uses the S&P 500 index divided by the 10-year average of inflation-adjusted earnings, signals a bubble if it peaks near 40+. The current Shiller CAPE ratio is 36.5, higher than its historical average of 16, but not yet near the 2000 dotcom bubble level of 44.19 in March 2000.
Optimists about the US stock market quote the high earnings growth of the top tech and industrial companies. S&P 500 companies have seen forward earnings per share estimates rise by 19.5% y-o-y, with 2025 overall projected at 15% growth. Leading companies have higher profit margins (around 13% compared with mid-2010s levels of 10%–11%) and improved return on equity (over 20% compared with prior levels of 16%), indicating that earnings growth is outpacing inflation.
Pessimists like Ray Dalio cite the unsustainable fiscal and trade deficits, which basically boost market liquidity (government spending inevitably floods the market with money). Others worry about the artificial intelligence bubble, with top AI companies such as OpenAI making large investments that outstrip their revenue growth.
The latest International Monetary Fund/World Bank world economic outlooks worry about the high oil prices resulting from the blocking of the Strait of Hormuz, which is disrupting energy and fertiliser supply, dampening global growth and worsening inflation.
What we do know is that there are internal dynamics within the US economy that are divergent from the booming stock market. US consumer sentiment indices are showing significant weakness in April 2026, with the University of Michigan’s Consumer Sentiment Index falling to a record low of 49.8, driven by inflation fears and economic concerns tied to geopolitical tensions, such as the Iran war, and announcements of job retrenchments by profitable companies that are benefiting from AI adoption. The US Consumer Price Index for March 2026 rose 0.9% monthly and 3.3% y-o-y, with energy prices (up 10.9%) and gasoline (up 21.2%) leading the surge.
Pew Research reported that 90% of Americans view current conditions as a crisis, especially among youth facing anxiety and depression. If the stock market were to reverse and interest rates were to rise, hitting real estate prices, we may be looking at a recession in 2027, 20 years after the 2007/08 subprime crisis. Gold is currently trading at US$4,682.70 per ounce, while Bitcoin stands at around US$91,151.
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Looking at two indicator assets, gold has retreated about 17% from its year-high of US$5,626.80 reached in January 2026, but is still up over 41% y-o-y. Bitcoin is trading around US$91,151, 28% down from the all-time high of US$126,210 set on Oct 6, 2025, and 12%–17% down y-o-y. Since the S&P 500 is up 24% y-o-y and has hardly moved despite the shooting at an event attended by US President Donald Trump, what does that tell you about the investment climate?
Anyone who tells you they know the answer is just guessing.
This story first appeared in the May 4 issue of The Edge Malaysia. Andrew Sheng writes on global issues from an Asian perspective
