India Becomes World’s 4th Largest Stock Market Surpasses Hong Kong
India’s stock market has hit a historic milestone, outshining Hong Kong in terms of total market capitalization. The combined value of shares listed on Indian exchanges reached an impressive $4.33 trillion as of the latest market close, edging ahead of Hong Kong’s $4.29 trillion (Bloomberg data).This accomplishment moves India to the fourth spot among the world’s largest equity markets, marking a significant economic stride.
This noteworthy journey commenced when India’s stock market capitalization surpassed the $4 trillion mark on December 5. Approximately half of this valuation was amassed over the last four years, showcasing India’s economic resilience and its increasing allure for both domestic and international investors.
Foreign investments played a pivotal role in India’s rise, with over $21 billion flowing into Indian shares in 2023 alone. This substantial foreign backing not only contributed to an eighth consecutive year of gains for India’s benchmark S&P BSE Sensex Index but also signaled a robust vote of confidence in the country’s economic prospects.
#India surpasses #HongKong to become world's fourth-largest stock markethttps://t.co/PnGJok7ldC pic.twitter.com/oiAd234t21
— Hindustan Times (@htTweets) January 23, 2024
Several factors have fueled the exuberance in India’s equities market. A rapidly growing retail investor base, robust corporate earnings, and the country positioning itself as a reliable alternative to China have been instrumental. India’s political stability, coupled with a consumption-driven economy ranking among the fastest-growing globally, has turned it into a magnet for investment.
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Ashish Gupta, Chief Investment Officer at Axis Mutual Fund in Mumbai, expressed optimism about India’s growth momentum, noting that the country possesses all the right ingredients for sustained growth. This positive trajectory of Indian stocks stands in stark contrast to the challenges faced by Hong Kong’s equities market.
Hong Kong’s recent decline can be attributed to a variety of factors, including a diminishing appeal as a gateway to China. While the region hosts some of China’s most influential and innovative firms, Beijing’s stringent anti-Covid-19 measures, regulatory crackdowns on corporations, a property-sector crisis, and geopolitical tensions with the West have collectively weighed heavily on Chinese stocks.
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The total market value of Chinese and Hong Kong stocks has witnessed a substantial decline, losing more than $6 trillion since their peaks in 2021. Hong Kong, once a bustling hub for initial public offerings (IPOs), has experienced a drying up of new listings, signaling a significant shift in its status as a global financial center.
In contrast to the challenges faced by Hong Kong, India has emerged as a favored destination for global investors. A consensus among investors, highlighted by Goldman Sachs Group Inc. strategists, positions India as the best long-term investment opportunity. The stable political environment and the country’s commitment to policy reforms add to its appeal.
While India’s stock market continues its upward trajectory, some strategists anticipate a potential turnaround in the Chinese market. UBS Group AG sees Chinese stocks outperforming Indian peers in 2024, driven by battered valuations in the former, suggesting significant upside potential. In contrast, Bernstein expects the Chinese market to recover and recommends taking profits on Indian stocks, considering them expensive.
