
Sign up to save your podcasts
Or
What does the chart show?
This chart shows the cumulative returns over the past three years of main India, China, Emerging Markets and US equity indices. The trends reveal how, amidst a challenging macro environment with economies recovering from the pandemic and withstanding high interest rates, India has performed best. What is also striking is India’s performance in comparison to Emerging Markets in particular China, who have been dealing with cyclical and structural challenges, including a property crisis, high debts, dwindling consumer sentiment and geopolitical tensions. In contrast, India recently surpassed China as the most populous nation and is predicted to average 6.3% growth until 20281 overtaking China as the global growth engine. Alongside a shift of capital away from China, India has drawn significant inflows due to favourable demographics, an ongoing digital transformation and cost-effective production capabilities attracting industry giants such as Apple and Google to set up camp. Prominent leaders of the democratic world such as US President Biden, UK Prime Minister Sunak and French President Macron have also recognised this evolving power shift and are keen to deepen ties with India as both a strategic counterbalance to China and economic partner.
Why is this important?
The past decade has been disheartening for emerging market investors and therefore the ability to identify promising markets like India has proven to be essential. The question is whether the superior returns gained by investors in India are sustainable or if current valuations already reflect the optimistic outlook going forward. The Nifty 50 (benchmark Indian stock market index) is currently trading at around a 22x P/E ratio compared to the CSI 300 (benchmark Chinese stock market index) trading around 12x, so in terms of value India may not be as favourable. Furthermore, enduring structural problems such as extreme wealth inequality, corporate corruption and low literacy rates may provide headwinds to sustaining the high growth levels predicted. However, in a global environment characterised by dim growth prospects across the board and pervasive instabilities, an economy as stable and continuously expanding as India should not be underestimated. With the size of and scale of India’s consumer base, potential for innovation and further development, the country emerges as an appealing contender to weather a challenging macro environment and potential external shocks. While risks of short-term price corrections cannot be ruled out, the investment proposition for India primarily rests in the long term.
What does the chart show?
This chart shows the cumulative returns over the past three years of main India, China, Emerging Markets and US equity indices. The trends reveal how, amidst a challenging macro environment with economies recovering from the pandemic and withstanding high interest rates, India has performed best. What is also striking is India’s performance in comparison to Emerging Markets in particular China, who have been dealing with cyclical and structural challenges, including a property crisis, high debts, dwindling consumer sentiment and geopolitical tensions. In contrast, India recently surpassed China as the most populous nation and is predicted to average 6.3% growth until 20281 overtaking China as the global growth engine. Alongside a shift of capital away from China, India has drawn significant inflows due to favourable demographics, an ongoing digital transformation and cost-effective production capabilities attracting industry giants such as Apple and Google to set up camp. Prominent leaders of the democratic world such as US President Biden, UK Prime Minister Sunak and French President Macron have also recognised this evolving power shift and are keen to deepen ties with India as both a strategic counterbalance to China and economic partner.
Why is this important?
The past decade has been disheartening for emerging market investors and therefore the ability to identify promising markets like India has proven to be essential. The question is whether the superior returns gained by investors in India are sustainable or if current valuations already reflect the optimistic outlook going forward. The Nifty 50 (benchmark Indian stock market index) is currently trading at around a 22x P/E ratio compared to the CSI 300 (benchmark Chinese stock market index) trading around 12x, so in terms of value India may not be as favourable. Furthermore, enduring structural problems such as extreme wealth inequality, corporate corruption and low literacy rates may provide headwinds to sustaining the high growth levels predicted. However, in a global environment characterised by dim growth prospects across the board and pervasive instabilities, an economy as stable and continuously expanding as India should not be underestimated. With the size of and scale of India’s consumer base, potential for innovation and further development, the country emerges as an appealing contender to weather a challenging macro environment and potential external shocks. While risks of short-term price corrections cannot be ruled out, the investment proposition for India primarily rests in the long term.