India Surpassing Hong Kong’s stock market

Indian stock market has now become the world’s fourth-largest stock market. Surpassing Hong Kong’s stock market, India has achieved this milestone. According to Bloomberg’s compiled figures, the total value of listed shares in the Hong Kong stock market is 4.29 trillion dollars, while in India, the total market capitalization of listed shares has reached 4.33 trillion dollars.

As of December 5, 2023, the market capitalization of the Indian stock market crossed the 4 trillion rupees mark, with half of it gained in the last four years.

India’s Equity Market Growth

The rapid growth of the equity market in India is fueled by impressive corporate earnings and the increasing number of retail investors. India, the most populous country in the world, has positioned itself as an alternative to China on the global stage. The stable political system and a thriving economy have consistently attracted investors worldwide, making it the fastest-growing economy.

Ashish Gupta, Chief Investment Officer at Axis Mutual Fund in Mumbai, states, “India has all the right ingredients to accelerate its development.”

Why is Hong Kong Lagging Behind?

On one hand, Hong Kong, where some of China’s most influential and innovative companies are listed, is experiencing historical setbacks, while on the other hand, the Indian stock market is reaching new heights daily. Various factors, such as strict COVID-19 restrictions in Beijing, regulatory actions on corporate governance, a property market crisis, and geopolitical tensions with the West, have collectively diminished China’s appeal as the world’s development engine.

However, some strategists anticipate a change. According to a report from UBS Group, China’s stock market is expected to outperform India in 2024, as poor valuations in China indicate the possibility of significant gains once sentiment shifts. Meanwhile, in India, valuations are already at high levels. Though the report suggests that currently, things seem to be in favor of India.

Investors Moving Away from China’s Growth Story

Hopes were high for economic stimulus measures in the new year, but disappointingly, China and Hong Kong saw increased frustration. The Hang Seng China Enterprises Index in Hong Kong is already nearly 13% below, having stopped a four-year record decline in 2023. It is heading towards its lowest levels in almost two decades, while India’s stock benchmarks are trading near record highs.

Investors who were previously influenced by China’s growth story are now shifting their investments towards India. According to a recent study by the Official Monetary and Financial Institutions Forum (OMFIF), even global pension and sovereign wealth managers are taking notice of India.

Foreign funds have invested over $21 billion in Indian stocks in 2023, helping the country’s benchmark S&P BSE Sensex index achieve continuous growth for the 8th consecutive year.

Strategists from Goldman Sachs, including Jason Glaum and Peter Oppenheimer, wrote in a note on January 16 with the results of a survey from the firm’s Global Strategy Conference, stating that India is undoubtedly the best place for long-term investments.

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