According to Bloomberg, India has overtaken Hong Kong as the world's fourth largest stock market in terms of capitalization.
With such outstanding results, India may achieve a lot. Its stock market has shown strength and excellent prospects.
On January 22, the total value of stocks listed on the National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE) reached an impressive $4.33 trillion.
As a result, the Indian stock market has surpassed the one of Hong Kong ($4.29 trillion) for the first time in history. According to experts, it has become the fourth largest stock market in the world. India was gradually moving towards this status as its stock market capitalization exceeded $4 trillion on December 5, 2023. Notably, 50% of the total capitalization came in the last four years.
Meanwhile, on January 22, Chinese shares fell to a record low on the Hong Kong Stock Exchange for the first time in the last 19 years. The slump was caused by growing pessimism among investors. The shares of Chinese technology giants such as Meituan (-5.5%) and Tencent Holdings (-3.46%) tumbled the most. As for the mainland China CSI 300 index, it collapsed by 1.56% to 3,218.9 points, while the Hang Seng China Enterprises index dropped by 2.96%. The latter posted its lowest value since July 2005 and was one of the worst performers in Asia.
The stock market in India is currently booming on the back of a constantly increasing number of retail investors. High corporate earnings are also contributing to the situation. In addition, India's equities boom positions it as a strong alternative to China. It is competing for foreign investors' funds quite successfully. The fact is that the Indian economy is considered to be one of the fastest-growing and most stable in the world.
According to analysts, India now has an economic heyday, while economic growth in China has slowed down and may face an uncertain future. "India is the best structural growth opportunity in emerging markets,” analysts at Global X ETF said.
The Hong Kong stock market is considerably behind the Indian one. Its decline could be explained by the extremely strict measures introduced by the Chinese government in relation to local business. Problems in the real estate sector and geopolitical confrontations with the West also fuel the situation. Against this background, a rout has wiped out more than $6 trillion from the market value of Chinese and Hong Kong stocks since a peak reached in 2021.
However, some analysts, including Bernstein and UBS Group, are optimistic about the near-term prospects of the Chinese stock market. The latter predicts that this year, Chinese stocks will surpass Indian ones in terms of yield, as they are undervalued and have huge growth potential.