India Surpasses Hong Kong in Stock Market Cap Milestone

India’s stock market has surpassed Hong Kong’s in market capitalization for the first time, marking another achievement for the South Asian nation. According to Bloomberg data, the combined value of shares listed on Indian exchanges reached $4.33 trillion, outpacing Hong Kong’s $4.29 trillion, making India the fourth-largest equity market globally. India’s stock market had crossed the $4 trillion milestone on December 5, with approximately half of that growth occurring in the past four years.

The surge in Indian equities is attributed to a growing retail investor base and robust corporate earnings. As an alternative to China, India has attracted significant global investment and corporate interest due to its stable political environment and a consumption-driven economy that ranks among the world’s fastest-growing.

Ashish Gupta, Chief Investment Officer at Axis Mutual Fund in Mumbai, highlighted that India possesses the right conditions for sustaining growth momentum. The bullish trend in Indian stocks coincides with a historic downturn in Hong Kong, where influential Chinese firms are listed. China’s challenges, including anti-Covid-19 measures, regulatory crackdowns, a property-sector crisis, and geopolitical tensions, have diminished its appeal as a global growth engine.

Chinese and Hong Kong stocks have collectively lost over $6 trillion since their 2021 peaks, with Hong Kong losing its status as a leading venue for initial public offerings. Despite some expectations for a turnaround in Chinese stocks, India currently enjoys momentum.

Foreign investors are redirecting funds from China to India, with global pension and sovereign wealth managers showing a preference for Indian markets. In 2023 alone, overseas funds invested over $21 billion in Indian shares, contributing to the eighth consecutive year of gains for the S&P BSE Sensex Index.

Goldman Sachs strategists revealed a consensus among investors that India represents the best long-term investment opportunity. This shift reflects optimism in India’s economic trajectory while the challenges facing China have contributed to a deeper sense of pessimism, further strengthening India’s position in the global investment landscape.