India has recently surpassed China as the largest market in the MSCI Emerging Markets Index. This significant shift reflects India’s robust stock market performance and economic growth.
According to MSCI IMI, India holds the top position among emerging markets. According to a September 17 Morgan Stanley report, India has steadily improved its weight in the index, with 2.35 percent compared to 2.24 percent for China. That makes India the sixth largest market globally, narrowly behind France, while China’s has significantly declined.
This trend is attributed to India’s strong corporate earnings, new listings, and improved market liquidity.
Morgan Stanley, a leading financial institution, has predicted that India will continue to gain market share in the global stock market. The firm remains optimistic about India’s prospects and maintains an “Overweight” rating. In contrast, Morgan Stanley has rated China as “Underweight.” The US tops the list with 63.23% market weight.
India Stock Market Surpasses China
Reports indicate that India is outpacing China in nominal GDP growth, which is marked by a widening gap in corporate earnings and operational performance between the two countries.
India is among the best-performing markets globally this year, with its benchmark indexes, NSE Nifty 50 and S&P BSE Sensex, up 17% and 15%, respectively. China’s Shanghai Composite Index is down about 9% this year amid concerns over the economy and the property sector.
The MSCI Emerging Markets Index captures large and mid-cap representation across 24 Emerging Markets countries. With 1,328 constituents, the index covers approximately 85% of each country’s free float-adjusted market capitalization.
The persistent weakness in Chinese equities has eroded the confidence of even the most ardent Wall Street supporters. As the world’s second-largest economy grapples with challenges, hopes for a swift turnaround are dwindling.
Over the past two weeks, several prominent investment firms, including UBS Global Wealth Management, Nomura Holdings Inc., and JPMorgan Chase & Co., have downgraded their outlook for Chinese equities. These downgrades reflect growing concerns about various factors, including the ongoing downturn in China’s real estate sector, the government’s piecemeal approach to economic stimulus, and the escalating tensions between the United States and China.
These factors have created a challenging environment for Chinese equities, leading to a decline in investor sentiment and a potential shift away from the country’s markets. As the situation evolves, it remains to be seen whether China can successfully address these challenges and regain the confidence of global investors.
(With Inputs From The Economic Times)
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