This month, manager Abhay Agarwal surprised him with the number of calls he received from international investors whose interest in India did not look temporary.
Agarwal is the founder of Piper Serica Advisors, a company based in Mumbai. "These investors come from family offices in Europe or some of the big institutions in the U.S., and they ......," he saidNever considered investing in India before. ”
The first time I found out they were very serious, they called ** to ask questions like, 'Is my money safe?'Is there a rule of law here?He added.
This interest comes at a time when India** is at an all-time high, with the total market capitalisation of companies listed on the Indian exchange surpassing $4 trillion at the end of November, according to Refinitiv.
There are two exchanges in India: the National Exchange of India (NSE) and the Mumbai Exchange (BSE), the latter being the oldest exchange in Asia, but now surpassing BSE in terms of trading value.
According to the World Federation of Exchanges (WFE), this strong** round means that the NSE has overtaken Hong Kong as the world's seventh-largest exchange by volume.
The latest number of listed companies on the world's major exchanges, the third red column on the right is NSE, with a total of 2,347;The eighth dark blue column on the right is the Hong Kong Stock Exchange, 2603 **WFE
India's market capitalisation means it has risen to the fourth largest market after the US, China and Japan, according to Refinitiv data.
People are excited about India," Mr. Agarwal said, adding that the investors who gave him the first prize wonder if India could bring "the kind of returns that China brought in the first decade of this century."
Agarwal said that in his 30-year investment career, he has seen the international community extremely bullish on India, but unfortunately, it was mainly the best investors.
"For the first time, I'm seeing very long-term investors, both strategic and financial, who have a 10-year horizon rather than a one-year horizon," he said. ”
India's benchmark, the SenseX index, which tracks 30 major companies, has grown by more than 16% this year, while the NIFTY 50 index, which has a larger sample size, has grown by more than 17% over the same period.
Two exchanges in India have also witnessed a boom in initial public offerings (IPOs). According to a report by Ernst & Young, in the first nine months of 2023, 150 companies were listed in India**. In the same period, there were 42 in Hong Kong.
Compete with China
Analysts believe that India's surge reflects the strength and potential of the world's fastest-growing major economy.
The International Monetary Fund (IMF) expects India's economy to grow by 6 percent this year3 percent, while some economists believe growth could be closer to 7 percent.
The world's fifth-largest economy grew by 76%, much higher than the country's central bank's expectations. The surprise prompted Citigroup and Barclays to raise their forecasts for India's annual GDP growth to 67%。
This optimism contrasts sharply with (......).
The SH Shanghai Composite Index is up 7% this year, and the Hong Kong Hang Seng Index is up nearly 19%.
Stephen Innes, managing partner of SPI Asset Management, said: "The performance of China** in the past 10 months has gone from an optimistic opening at the beginning of the year to a disappointing second half of the year. What he said was that **appeared** after China abandoned strict epidemic prevention at the beginning of the year.
The different growth stories of India and China are key to competing for emerging market (capital) inflows," he said.
Goldman Sachs said in a November report that the economic linkage between the Indian economy and China's end-use demand was minimal ......In addition, India** is the least sensitive to China's economic slowdown in the region.
As the world's most populous country, India is also less sensitive to other global economic risks, in part due to the growing influence of domestic institutions and investors.
Goldman Sachs researchers believe that India's domestic liquidity will continue to support the market and limit the risk of a sharp downside in the face of global risks.
Nomura said in a December report that India was "less affected by the global slowdown" and that India could become a "counterweight to North Asia" if Western economic growth slows and China's economic recovery remains disappointing.
According to Nomura, India "has a lot of high-quality companies......Although the share price is already expensive", at the same time, India may also benefit from companies diversifying the ** chain away from China.
Since last year, Apple has significantly expanded production in India after experiencing ** chain problems in Chinese mainland.
According to a recent survey by the Japan Bank for International Cooperation (JBIC), India has also emerged as the "most promising medium-term business destination" for Japanese manufacturers. China has been squeezed into second place due to the economic slowdown and growing tensions between Washington and BJ.
What happens next?
Despite India's recent strong economic growth momentum, foreign investors are likely to choose to wait and see in the first half of 2024, when India will take place**, which is expected to take place in April and May.
"In the near term, we expect FDI inflows to pick up after election uncertainty subsides, although election-related uncertainty and a difficult global macro environment may weaken FDI inflows over the next 3-6 months," Goldman Sachs noted. ”
Market watchers hope that Prime Minister Narendra Modi's ruling Bharatiya Janata Party will win to ensure political stability.
This is very likely to happen. Since becoming prime minister in 2014, Modi has grown in power and popularity, while his opponents have been pushed aside.
But not every economist is so optimistic about India's prospects, with some believing that an economic slowdown is coming.
Alexandra Hermann of Oxford Economics wrote earlier this month: "Private consumption has remained strong so far. "But with some of these spending being driven by debt, coupled with a struggling labor market, this year's spending could plague consumers again next year." ”
The public sector may not be able to offset this slowdown, as ** debt levels remain high, she added: "To maintain investor confidence......."*Fiscal prudence will be required. ”
Critics also say that the current buoyancy is not the most reliable measure of India's economy. India is working hard to create suitable jobs for its large working-age population and provide a sustainable and inclusive growth path.
Former central bank governor Rajhoom Rajan and economist Rohit Lamba wrote in their recently published book, "Breaking the Mould: "...... for a variety of reasonsWe have seen an increase in the profitability of large companies in this country, while smaller and informal companies have performed relatively poorly. But only the former is listed (and widely watched), which provides a misleading picture of the broader economic picture. ”
"In fact, many small businesses with large employment populations have shrunk over the past few years, such as the clothing and leather industries," they added. ”
This article was originally published on CNN on December 26, 2023 under the title "India Joins the Ranks of Stock Market Superpowers."
Number of listed companies on the Indian Exchange over the years (as of end of FY2022) *statista
Number of listed companies on the NSE (including nearly 100 small and medium-sized board companies, the fiscal year ends at the end of March of the same year) *IPOcentralin
Supplements
Founded in 1875, the Bombay** Exchange (BSE) represents the SenseX30 index and has about 4,800 listed companiesThe National ** Exchange (NSE) was established in 1992 by several financial institutions, officially began trading in 1994, as of November this year, there are 2,347 listed companies (according to WFE, including small and medium-sized board companies), the representative index is the NIFTY50 index.
Hong Hao, chief economist of Sirui Group, mentioned in a post on Weibo earlier this month that A San has become a third master, which needs logic and data support, "The data shows that since 1991, the Indian currency** has risen 93 times, and the Indian stock index has risen 66 times. As a result, at least half of India's stock index gains came from currency depreciation and inflation. ”
JPMorgan Chase & Co. strategist Rajiv Batra recently analyzed in a research report: "We believe that the near-term factors driving India** higher includeStrong economic data, corporate earnings figures, oil prices**withStrong domestic flows
India's recently reported gross domestic product (GDP) for the third quarter grew 7 year-on-year6%, ranking first among the world's top 10 economies, with a growth rate of 61% and 78%。As a result, Wall Street investment banks have increased their economic growth rates for India**. Barclays, Citi**, India's economy will grow by 67%, up from 63% and 62%。Morgan Stanley also added India's GDP growth for FY2024 from 64% to 69%。Over the next three years, India** returns are expected to be 10% higher than global emerging market benchmarks, according to the company.
Guo Jian, an investment adviser at Guoyuan**, said that since 1992, India has implemented a registration system that requires complete and transparent information disclosure. Once a violation is discovered, the company will face severe penalties for delisting, and will not be allowed to re-list or transfer interests for 10 years
In addition, India attaches great importance to investor protectionAt the time of delisting, investors must repurchase their shares to ensure that shareholders' rights and interests are not infringed.
Again, its trading mechanism is:Institutional T+3, Individual Investment T+0,Therefore, these mechanisms have guaranteed that India can have a long-term cattle market for 20 years.
Currently, some investors are concerned about the overvaluation of the Indian market and the overcrowding of India** deals. The rising participation of individual investors, many of whom heeded the advice of unauthorized financial advisors and social ** "experts", is becoming a concern for market regulators, according to Indian news network Mint.
In addition, options trading in India has seen a growth this year. It is estimated that there are about 4 million active derivatives traders in India, and these are mostly small-scale players. Reuters reported that the average daily asset value of these ** options more than doubled to 4$2 trillion.
The "sharp" increase in trading volume has raised concerns about investor protection issues. Former Chairman of India's Exchange Board Tiagi said, "Investors with limited financial literacy want to make easy money, but there is a bubble in the market. (Comprehensive ** report).