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Wall Street snubs China for India in a historic markets shift
- Over the past two decades, India’s gross domestic product and market capitalisation rose in tandem from US$500 billion to US$3.5 trillion
- India briefly overtook Hong Kong as the fourth-largest equity market last month; Morgan Stanley predicts it will be the world’s third-biggest by 2030
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A momentous shift is under way in global markets as investors pull billions of dollars from China’s sputtering economy, two decades after betting on the country as the world’s biggest growth story. Much of that cash is now heading for India, a market endorsed by Goldman Sachs and Morgan Stanley.
That momentum is triggering a gold rush. The US$62 billion hedge fund Marshall Wace has positioned India as its biggest net long bet after the US in its flagship hedge fund. An arm of Zurich-based Vontobel Holding AG has made the country its top emerging-market holding and Janus Henderson is exploring fund-house acquisitions. Even Japan’s traditionally conservative retail investors are embracing India.
Investors are paying attention. India, the world’s fastest-growing major economy, has expanded infrastructure under Prime Minister Narendra Modi in his bid to lure global capital and supply chains away from Beijing. In contrast, China is grappling with chronic economic woes and a widening rift with the Western-led order.
“People are interested in India for several reasons, one is simply it’s not China,” said Vikas Pershad, Asian equities portfolio manager at M&G Investments in Singapore. “There’s a genuine long-term growth story here.”
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Hong Kong stock market falls below 15,000 level, its lowest in 15 months
Hong Kong stock market falls below 15,000 level, its lowest in 15 months
While the bullish sentiment about India isn’t new, investors are more likely now to see a market that resembles the China of times past: a vast, dynamic economy that is opening up to global money in novel ways. Nobody expects a smooth ride. The country’s population is still largely poor, stock markets are expensive and bond markets insular. But most are making the crossover anyway, calculating that the risks of betting against India are greater.
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