Usman Salis
In a few countries, the global technology sector is more concentrated than in others besides Taiwan is the most prominent. It is clear from new data that information technology makes up 85.3% of the total market capitalization in Taiwan. By this measure Taiwan is significantly ahead of every other major economy.
On this list South Korea is at 57.2% and the Netherlands is at 54.6%. For those markets, the industries that produce semiconductors and chips are very large - but the United States is different, as its relative concentration is approximately 32.7% even though it is the location for the largest technology companies in the world.
To explain this one must look at how markets are structured differently. If one looks at Taiwan or South Korea, the economies rely heavily on a few chipmakers that are dominant across the globe. As for the U.S. equity market, it is more diverse because it includes many sectors like financials, healthcare and consumer industries. In major indices across the world, technology is still the largest sector. And this is frequently because of companies like Apple, Microsoft next to Nvidia.
By contrast European markets are much less involved in technology. Due to their structural differences from the U.S. & Asia, countries like France, the UK besides Switzerland report that technology weights are below 1 - 2 %. With those figures, it is evident that Europe does not lead in digital and semiconductor fields.
There is a broad trend where technology shapes the global equity market but the geographic concentration is not uniform. In some countries, technology is the main part of the market. In other countries, it is a small part.
Usman Salis
