India has become an investment favorite due to its development potential and legislative changes, while China is seeing massive capital outflow. Now, India has surpassed Hong Kong in terms of stock market value.
According to figures collated by Bloomberg, the cumulative value of shares listed on Indian markets hit $4.33 trillion as of Monday's closing, January 22, while Hong Kong reached $4.29 trillion. This makes India's stock market the fourth largest in the world. Its worth surpassed $4 trillion for the first time on December 5, 2023, with the previous four years accounting for over half of that increase.
Strong corporate profitability and an expanding pool of individual investors have contributed to the Indian stock market's remarkable growth. The most populous country in the world has successfully positioned itself as a viable alternative to China, drawing in new investment and business capital from across the globe. This is due to its relatively stable political system and its rapidly expanding consumer-driven economy.
Collapse of China, Hong Kong Stocks
While Indian equities have been steadily rising, Hong Kong stocks, which include some of China's most prominent and forward-thinking companies, have been declining at a record rate.
The enticement of China as the world's economic engine has been diminished due to Beijing's strict anti-COVID-19 restrictions, regulatory crackdowns on firms, a property-sector crisis, and geopolitical tensions with the West.
The stock markets in China and Hong Kong have been through a monumental collapse, with a combined market value of almost $6 trillion in losses from their 2021 highs. As a result, the Asian financial center is no longer one of the world's most active sites for initial public offerings, and new listings have dried up in Hong Kong.
China's Strategies Expecting Positive Shift
A few strategists were hoping for a change for the better.
In 2024, Chinese equities are expected to outperform their Indian counterparts, according to a November 2023 analysis by UBS Group AG. This is because, despite the fact that Indian stocks are now at fairly extreme levels, the battered values in China indicate substantial upside potential if the condition alters.
In a report from earlier this month, Bernstein predicted that the Chinese market would bounce back and advised selling Indian equities because of their high valuation.
Tuesday, January 23, saw a rise in mainland Chinese stocks as reports surfaced that the country's leaders were mulling on a set of steps to revive the flagging market.
Still, the tide seems to be turning in favor of India at the moment.
