India surpasses Hong Kong to become world’s fourth-largest stock market

January 23, 2024 (MLN): India’s stock market capitalization has overtaken Hong Kong’s for the first time making it the fourth-biggest equity market globally, as Bloomberg reported.

The South Asian nation’s growth prospects and policy reforms make it an investor darling while global capital pours out of China.

The combined value of shares listed on Indian exchanges reached $4.33 trillion as of Monday’s close, versus $4.29tr for Hong Kong, according to data compiled by Bloomberg.

Its value crossed $4tr for the first time on December 05 2023, with about half of that coming in the past four years.

Equities in India have been booming, thanks to a rapidly growing retail investor base and strong corporate earnings.

The world’s most populous country has positioned itself as an alternative to China, attracting fresh capital from global investors and companies alike, thanks to its stable political setup and a consumption-driven economy that remains among the fastest-growing of major nations.

The relentless rally in Indian stocks has coincided with a historic slump in Hong Kong, where some of China’s most influential and innovative firms are listed.

Beijing’s stringent anti-Covid-19 curbs, regulatory crackdowns on corporations, a property-sector crisis and geopolitical tensions with the West have all combined to erode China’s appeal as the world’s growth engine.

“We see India as the best structural growth story across not just emerging markets, but worldwide,” said Evan Metcalf, CEO at Global X ETFs.

“While China’s growth has stalled and is mired in uncertainty, India has a generational opportunity to emerge as the growth engine of emerging markets. Demographics are a key advantage, coupled with a surge in educated youth and a progressive government pursuing key structural reforms.”

Meanwhile, Chinese and Hong Kong equities are suffering a rout of epic proportions, with the total market value of their stocks having tumbled by more than $6tr since their peaks in 2021.

New listings have dried up in Hong Kong, with the Asian financial hub losing its status as one of the world’s busiest venues for initial public offerings.

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