Global stock markets have produced some extraordinary returns in 2026.
As of early September, Taiwan, Japan, Brazil, Italy, and the Netherlands are the five strongest-performing country markets based on major country ETFs.
But one country is conspicuously missing from that list.
South Korea.
Only a few months ago, South Korea was one of the hottest stock markets in the world. On May 6, the KOSPI crossed 7,000 for the first time after an extraordinary rally powered by AI and semiconductor stocks.
By September, however, the picture had changed. According to justETF’s country-market data, Taiwan, Japan, Brazil, Italy, and the Netherlands occupied the top five positions based on 2026 performance measured in euros as of September 5.
So what happened to South Korea?
And why have these five markets moved ahead? The interesting part is that they are not being driven by the same story.
Taiwan is riding the global AI and semiconductor boom. Japan is experiencing a corporate revaluation. Brazil is tied to commodities, interest rates, and emerging-market capital. Italy reflects renewed interest in European financial and value stocks. The Netherlands occupies a critical position in the global semiconductor equipment supply chain.
Let’s look at those five markets first. Then we will come back to South Korea.
The Five Hottest Stock Markets Right Now
| Country | 2026 YTD Return | The Main Story |
|---|---|---|
| Taiwan | 76.36% | AI and advanced semiconductors |
| Japan | 23.22% | Corporate revaluation and shareholder returns |
| Brazil | 22.88% | Commodities, rates and emerging-market capital |
| Italy | 19.52% | Banks, industrials and European value |
| Netherlands | 19.30% | Semiconductor equipment and advanced technology |
These figures are based on country ETF performance as of September 5, calculated in euros using the largest ETF tracking each respective country index.
That distinction matters. Returns measured in local currencies or U.S. dollars can look different because exchange rates affect investor returns.
1. Taiwan — The World Buys AI, Taiwan Builds Its Heart
Taiwan is in a league of its own in 2026. Its leading country ETF was up 76.36% by September 5, far ahead of every other market in the ranking.
But the real story is not the percentage. It is what the world is spending money on.
Technology companies around the world are pouring enormous amounts of capital into AI data centers. Those data centers need GPUs, advanced processors, servers, memory, networking equipment, and an increasingly sophisticated semiconductor supply chain.
Taiwan sits near the center of that system. TSMC is the world’s dominant manufacturer of many advanced chips used in AI computing, while Taiwan is home to a much broader ecosystem of electronics, servers, components, and semiconductor suppliers. TSMC’s planned U.S. investment has reached $265 billion in Arizona.
The effect extends beyond chip factories. Foxconn reported that its August revenue jumped 51.98% year over year, supported by strong AI demand.
That is why Taiwan has become one of the clearest stock-market expressions of the global AI boom. But its greatest strength is also its biggest vulnerability.
If global AI infrastructure spending continues, Taiwan remains directly in the path of that spending. If enthusiasm for AI investment weakens, the same concentration in technology and semiconductors could amplify the downside. Geopolitical tension across the Taiwan Strait also remains an unavoidable risk.
So the most important question for Taiwan is not whether the market has already risen 76%.
Will the world continue spending enormous amounts of money on AI infrastructure?
2. Japan — A Market the World Ignored for Decades Is Being Repriced
Japan tells a completely different story. Its 2026 rally is not simply another version of Taiwan’s AI boom.
For decades, Japanese equities carried a familiar reputation: high-quality companies and large cash holdings, but often disappointing capital efficiency and weak shareholder returns.
That perception has been changing. Pressure for better corporate governance, greater capital efficiency, higher dividends, and share buybacks has encouraged investors to reconsider how Japanese companies should be valued.
Japan also remains strong in industries that matter again: semiconductor equipment, factory automation, precision machinery, robotics, and automobiles.
Japan’s country ETF was up 23.22% in 2026 as of September 5.
That gain tells a very different story from Taiwan’s surge. Japan did not suddenly become a new technology superpower. It already had globally competitive companies. What changed was how investors valued them.
If Japanese companies use their capital more efficiently, return more money to shareholders, and improve profitability, those businesses may deserve higher valuations than they received in the past.
Is this simply another rally, or is the market finally breaking away from decades of chronic undervaluation?
3. Brazil — You Do Not Need AI to Have One of the World’s Hottest Markets
Brazil changes the story again. There is no TSMC-style semiconductor giant driving this market.
Instead, Brazil is influenced heavily by commodities, interest rates, currency movements, domestic demand, and global flows into emerging markets. Yet Brazil’s country ETF was up 22.88% for the year as of September 5.
Brazil is a major producer of iron ore, oil, agricultural commodities, and other natural resources. That means its stock market often responds to forces very different from those driving American or Asian technology stocks.
Global economic growth matters. Commodity demand matters. China matters. Brazilian interest rates matter. And the Brazilian real matters enormously to international investors.
This is what makes Brazil particularly interesting in a year dominated by AI headlines. It demonstrates that a stock market does not need a booming technology sector to become one of the world’s strongest performers.
An investor looking at Taiwan is largely watching AI infrastructure and semiconductor demand. An investor looking at Brazil is watching a different world: commodities, rates, currencies, domestic growth, and emerging-market capital flows.
4. Italy — A Country Does Not Need Rapid Economic Growth for Its Stocks to Rise
Italy may be the biggest surprise on the list.
When people think about the Italian economy, high government debt and relatively slow long-term growth often come to mind. Yet Italy’s country ETF was up 19.52% in 2026 as of September 5.
That reveals an important lesson about investing: a strong economy and a strong stock market are not necessarily the same thing.
Stock prices begin with expectations. A fast-growing economy can produce disappointing investment returns when its companies are already extremely expensive. A slower-growing economy can produce strong stock-market returns when companies start from lower valuations and conditions improve.
Italy’s market includes major banks, industrial companies, energy businesses, automakers, and globally recognized luxury brands. European banks were positioned for stronger profits from lending and trading in 2026.
Italy’s rally therefore does not mean the country suddenly transformed into a high-growth economy. It tells a subtler story: after years in which American technology companies dominated investor attention, comparatively inexpensive parts of Europe are attracting capital again.
5. Netherlands — A Small Country With an Outsized Role in the Chip Industry
The Netherlands looks small beside the United States, Japan, or China. But economic size alone does not explain its importance to modern technology.
AI chips require extraordinarily complex manufacturing equipment, precision engineering, materials, software, and global supply chains. The Netherlands occupies a critical position in that system.
Dutch companies play important roles in semiconductor equipment and technology, meaning the country can benefit from the same long-term investment cycle driving global demand for advanced chips.
The Netherlands’ country ETF had gained 19.30% in 2026 by September 5.
This shows how the AI boom spreads far beyond the companies whose names appear on consumer products. The companies designing AI chips matter. The companies manufacturing them matter. But the companies supplying the machines required to produce those chips matter too.
So What Happened to South Korea?
Now we can return to the question from the beginning.
Earlier this year, South Korea looked almost unstoppable. AI enthusiasm and semiconductor stocks — particularly Samsung Electronics and SK Hynix — transformed the Korean market into one of the world’s biggest equity stories.
On May 6, the KOSPI crossed 7,000 for the first time.
But extraordinary rallies create extraordinary expectations. Investors started questioning whether record earnings tied to AI could continue at the pace markets had begun to expect.
On July 7, the KOSPI fell 4.9% as major chipmakers tumbled on AI-related concerns. The decline was severe enough to trigger a temporary trading halt.
The important point is that Korea’s semiconductor business did not suddenly collapse. The stock market was reacting to expectations. When prices rise extremely quickly, even strong earnings can disappoint investors if those investors were expecting something even better.
And Korea’s underlying semiconductor story remains remarkably strong. By early September, South Korea export data, already surpassing the previous full-year record.
Even more striking, semiconductor exports from January through August surged 169.6% year over year to $281 billion as global AI demand continued to support Korean chipmakers.
That creates one of the most interesting contradictions in global markets this year. South Korea’s fundamental semiconductor export story remains exceptionally strong, but its stock market moved so quickly that even powerful business growth could not prevent extreme volatility when investor expectations changed.
South Korea therefore did not simply go from a bull market to a failed market. It became a vivid example of what happens when real earnings growth and even faster investor expectations collide.
The Most Important Question Is Not Which Market Rose the Most
Taiwan is being driven by AI and advanced semiconductors. Japan is undergoing a corporate and valuation reset. Brazil is moving with commodities, interest rates, currencies, and emerging-market capital. Italy reflects renewed interest in European banks, industrials, and value stocks. The Netherlands shows how a relatively small country can become essential to the global technology supply chain.
And South Korea offers another lesson entirely.
The hottest market today is not guaranteed to remain the hottest market a few months from now.
That is why a ranking of the world’s best-performing stock markets should never end with only one question: “Which country went up the most?”
A much more useful question is: “Why did it rise — and will that reason still exist in 2027?”
The answer to that question matters far more than this year’s ranking.
FAQ
Which stock market has performed the best in 2026?
As of September 5, Taiwan leads the country ETF ranking with a 76.36% year-to-date return in euro terms. Its performance has been closely tied to the global AI boom and Taiwan’s central role in advanced semiconductor manufacturing.
Why is South Korea no longer among the top five?
South Korea experienced an extraordinary semiconductor-driven rally earlier in 2026, followed by a sharp correction as expectations surrounding AI stocks became extremely high. Importantly, semiconductor export data, showing that stock-market volatility did not mean the underlying chip industry had collapsed.
Does a hot stock market mean it is a good time to invest?
No. A market that has already risen sharply may still have strong fundamentals, but high past returns do not guarantee future gains. Investors should examine why the market rose, current valuations, currency risk, concentration, and whether the main growth drivers can continue.
Could today’s top five markets look completely different in 2027?
Yes. The 2026 ranking is a snapshot, not a prediction. AI spending, interest rates, commodity prices, currencies, corporate earnings, and geopolitical events can all change market leadership. South Korea’s rapid rise and subsequent volatility in 2026 show how quickly global rankings can change.
This article is for general informational purposes only and does not constitute investment advice or a recommendation to buy or sell any stock, ETF, or country market. Country ETF returns vary depending on the measurement date, benchmark, and currency.