In a significant market trend, global investors are redirecting billions of dollars from China and India, with financial powerhouses like Goldman Sachs Group and Morgan Stanley endorsing India as the prime investment destination for the next decades.
Marshall Wace, a $62 billion hedge fund has positioned India as its most substantial net long bet after the United States in its flagship hedge fund. Vontobel Holding AG’s arm has designated India as its top emerging-market holding, while Janus Henderson Group Plc is actively exploring fund-house acquisitions.
Surprisingly, even Japan’s traditionally conservative retail investors stare favoring India and reducing exposure to China, according to a Bloomberg report.
"People are interested in India for several reasons - one is simply it's not China," Vikas Pershad, Asian equities portfolio manager at M&G Investments in Singapore.
"There's a genuine long-term growth story here."Aniket Shah, global head of environment, social and governance practice at Jefferies Group LLC., noted that a recent investor call about India was one of the firm's best-attended. "People are really trying to figure out what's going on in India," he said.
India expanded infrastructure under Prime Minister Modi, aiming to attract global capital and divert supply lines away from Beijing, has played a crucial role in this shift.
In US exchange-traded fund market, the main fund buying Indian stocks received record inflows in the final quarter of 2023, while the four largest China funds combined saw outflows of almost $800 million. Active funds Active bond funds have allocated 50 cents to India for every dollar withdrawn from China since 2022, according to EPFR data.
"In terms of index weights, China would be lower and India bigger," emphasized Mark Matthews, the Singapore-based head of Asia research at Bank Julius Baer, which launched it’s first-ever India fund last year. "That's the direction."
As India emerges as a favoured investment hub, the global financial landscape is witnessing a notable recalibration long term growth prospects.