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Wall Street shifts billions from China to India
FILE PHOTO: India's Minister for Information Technology Ashwini Vaishnaw addresses an audience during the 'SemiconIndia 2023', India’s annual semiconductor conference, in Gandhinagar, India, July 28, 2023. REUTERS/Amit Dave
Investors are reportedly redirecting billions of dollars from China towards India, with prominent Wall Street firms like Goldman Sachs Group and Morgan Stanley endorsing India as the primary investment destination for the coming decade.
China, the world’s biggest growth story maintaining over 9 percent growth rate for three decades, is seeing its fortunes, quite literally shift, as its economy undergoes its first sustained slowdown in 30 years. India is now being touted as the next big investment hot spot and long-growth story in what Bloomberg is referring to as a “historic market shift”.
This shift in global investment strategies mirrors wider geopolitical trends, positioning India as a potential counterweight to China’s sway. Under Prime Minister Narendra Modi, India has significantly expanded its infrastructure in a bid to attract global capital and divert supply chains away from Beijing.
India has been signing a stream of bilateral agreements with French President Macron visiting recently, and a group of European countries including Switzerland and Norway pledging $100 billion investment over the next 15 years, all vying for facilitated market entry in what is increasingly regarded as a feasible manufacturing alternative to China. Last month, the country’s Information Technology Minister Ashwini Vaishnaw told Reuters India is eyeing $100 billion in annual foreign direct investment (FDI) “in the next few years”.
Marshall Wace, a hedge fund managing $62 billion, has elevated India to its largest net long position after the US in its flagship fund. Vontobel Holding AG’s arm has designated India as its foremost emerging-market holding, while Janus Henderson Group Plc is exploring acquisitions of Indian fund houses. Even Japan’s traditionally conservative retail investors are favouring India over China, according to Bloomberg.
In the US exchange-traded fund market, the primary fund investing in Indian stocks witnessed record inflows in the final quarter of 2023, while the combined outflows from the four largest China-focused funds amounted to almost $800 million. Active bond funds have allocated 50 cents to India for every dollar withdrawn from China since 2022, according to EPFR data.
