Indian Market Makes a Power Play, Topples Hong Kong from #4 Spot

23 Jan 2024 , 08:44 AM

In yet another achievement for the South Asian country whose development prospects and policy reforms have made it an investment darling, India’s stock market has surpassed Hong Kong’s for the first time.

Bloomberg data shows that as of Monday’s closing, the total value of shares listed on Indian exchanges was $4.33 trillion, compared to $4.29 trillion for Hong Kong. India is now the world’s fourth-largest equity market as a result. On December 5, its stock market capitalization exceeded $4 trillion for the first time, with over half of that amount coming from the previous four years.

India’s equity market has been thriving because of robust corporate profitability and a steadily expanding pool of regular investors. Thanks to its stable political system and a consumption-driven economy that continues to grow at one of the quickest rates among major nations, the most populous country in the world has positioned itself as a viable alternative to China, drawing new investment from both international investors and corporations.

The unrelenting rise in Indian stocks has occurred at the same time as a record sell-off in Hong Kong, the listing hub for some of China’s most prominent and creative companies. China’s appeal as the world’s growth engine has been undermined by Beijing’s strict anti-Covid-19 regulations, regulatory crackdowns on firms, a property-sector crisis, and geopolitical tensions with the West.

Additionally, they set off an epic-scale stock market meltdown, with the value of all Chinese and Hong Kong stocks plunging below their 2021 peaks by more than $6 trillion. Hong Kong, the Asian financial centre, is no longer one of the busiest places in the world for initial public offers (IPOs) as there are fewer new listings now.

The lack of significant economic stimulus measures in the new year has contributed to a further deepening of pessimism towards China and Hong Kong. After ending a record-breaking four-year losing trend in 2023, the Hang Seng China Enterprises Index, a measure of Chinese shares listed in Hong Kong, is now down almost thirteen percent. The measure is rapidly approaching its lowest point in over 20 years, but the benchmarks for Indian stocks are trading close to all-time highs.

Investors who were previously captivated by China’s story are now shifting their money to its adversary in South Asia. According to a recent survey by the London-based think group Official Monetary and Financial Institutions Forum, global pension and sovereign wealth managers are also perceived as favouring India.

In 2023, foreign investors invested over $21 billion in Indian stocks, contributing to the nation’s benchmark S&P BSE Sensex Index reaching a record eight years of increases.

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