India has become the world’s fourth-largest stock market, surpassing Hong Kong. As of the latest data compiled by Bloomberg, the combined value of shares listed on Indian exchanges reached an $4.33 trillion at Monday’s close, surpassing Hong Kong’s $4.29 trillion.
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The stock market capitalization crossed the $4 trillion mark on December 5, with approximately half of this growth occurring in the last four years alone.
One of the drivers behind India’s soaring stock market is the burgeoning retail investor base and corporate earnings.
The country’s equities have experienced a boom, turning India into a global hotspot for investors. The rally in the Indian stock market has coincided with a downturn in Hong Kong, where some of China’s most innovative companies are listed.
Overseas funds have main in India’s financial success story, pouring more than $21 billion into Indian shares in 2023 alone.
This influx of foreign investment has propelled the country’s benchmark S&P BSE Sensex Index to cap an eighth consecutive year of gains.
The growing interest from global investors and companies can be contributed to India positioning itself as a stable alternative to China, has a politically secure environment and a consumption-driven economy that ranks among the fastest-growing globally.
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While India’s stock market continues in the upward direction, Hong Kong has struggled with a historic slump.
Various challenges, including stringent anti-COVID-19 measures in Beijing, regulatory crackdowns on corporations, a property-sector crisis, and geopolitical tensions with the West, have collectively eroded China’s appeal as the world’s growth engine.
The total market value of Chinese and Hong Kong stocks has seen a decline of over $6 trillion since their peaks in 2021.
Hong Kong’s status as a hub for initial public offerings (IPOs) has waned, with new listings drying up amid the turmoil.
In contrast, India’s stock market has become an attractive destination for global pension and sovereign wealth managers.
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A recent study by the London-based think-tank Official Monetary and Financial Institutions Forum revealed a preference for India among these institutional investors.
While some strategists anticipate a turnaround for Chinese stocks, with UBS Group AG suggesting outperformance in 2024, the momentum currently favors India.
The pessimism toward China has deepened in the new year, by a lack of major economic stimulus measures.
The Hang Seng China Enterprises Index, representing Chinese shares listed in Hong Kong, has already experienced a 13% decline, extending a record four-year losing streak in 2023.
Foreign investors, who were once enamored with the China narrative, are now redirecting their funds toward India.
Goldman Sachs Group Inc. strategists, including Guillaume Jaisson and Peter Oppenheimer, addressed the clear consensus that India presents the best long-term investment opportunity in a note from January 16, citing results from the firm’s Global Strategy Conference.
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