Taiwan and South Korea markets rally on AI chipmakers but face risks from heavy concentration.

Taiwan's Taiex and South Korea's Kospi stock markets have surged to record highs this year, driven mainly by semiconductor giants like TSMC, Samsung Electronics, and SK Hynix, which now make up over 40% of their respective indexes. This heavy reliance on a few AI-related chipmakers raises concerns about market concentration risks, including vulnerability to geopolitical tensions, supply chain disruptions, and shifts in global AI spending. While South Korea's market is somewhat more diversified, Taiwan's market is increasingly tied to TSMC, making it more sensitive to semiconductor demand cycles. Investors should be cautious as this concentration could amplify volatility and pose risks if the AI growth theme slows down or faces shocks.