Breaking Stories

China’s $5 Trillion Rout Creates Historic Gap With Indian Stocks


S&P Futures




Dow Futures




Nasdaq Futures




Russell 2000 Futures




Crude Oil
















10-Yr Bond




















CMC Crypto 200




FTSE 100




Nikkei 225




(Bloomberg) — The relentless plunge in China’s stocks has burnished the appeal of their biggest emerging-market rival India, spurring a divergence that’s rarely been seen before.

Most Read from Bloomberg

Credit Suisse CEO Seeks to Calm Markets as Default Swaps Climb

Gazprom Halts Gas Supplies to Italy in Latest Energy Battle

Get Ready for Another Bear-Market Rally, Strategist Emanuel Says

Tesla Deliveries Miss Estimates, Slowed by Logistic Snarls

OPEC+ to Consider Output Cut of More Than 1 Million Barrels

The MSCI India Index rallied almost 10% in the just-ended quarter, compared with a 23% slump for the MSCI China Index. The 33-percentage point outperformance by the India gauge is the biggest since March 2000.

Beijing’s Covid Zero pursuit, regulatory crackdowns and tensions with the West have led to a $5 trillion rout in Chinese stocks since early 2021. And India — long dubbed the “next China” — has become an attractive alternative with economic growth that’s forecast to be the fastest in Asia.

Market veteran Mark Mobius has allocated a higher weight to India than China since the start of this year. Jupiter Asset Management says some of its emerging-market funds have India as their largest holding. M&G Investments (Singapore) Pte has made a “greater allocation” to India in 2022.

India’s expanding domestic market means the country can weather a looming global recession better than most other emerging markets, money managers say. In the longer term, China’s decoupling with the US may also pave the way for Indian firms to boost their presence worldwide.

China’s “draconian lockdowns continue to impact these supply chains, so the clamor for an alternative has been rapidly gaining favor,” said Nick Payne, a London-based investment manager for global emerging-market equities at Jupiter. “India is the key candidate to fill that role, in an approach that’s been dubbed China+1.”

READ: China Supply Chain Risk Gives Little-Known Indian Stocks a Boost

‘Early Stages’

The big divergence between the two stock markets started to take place in February 2021 as tightening liquidity conditions in China contributed to the unwinding of a two-year rally in equities. Indian stocks, meanwhile, kept hitting record highs thanks to an unprecedented retail investing boom.

The aggregate market value of firms included in the MSCI China Index has dropped by $5.1 trillion since then and the gauge closed Friday at its lowest level since July 2016. The MSCI India Index — which reached an all-time high earlier this year — has added about $300 billion.

A long-term correlation between the two gauges has been negative since November, the longest stretch on record.

Investor positioning has also diverged. Global EM Fund allocations to India are at a record high while those to China are recovering modestly from a sharp drop in the past few quarters, according to Cameron Brandt, director of research at EPFR Global, a Cambridge, Massachusetts-based research firm.

“The increasing allocation of investor capital both to India-only and to Asia ex-China funds hints that this shift is still in its early stages,” said Vikas Pershad, a fund Manager at M&G Investments. “Some of the barriers to investing in China appear to be structural and longer lasting than expected.”

To be sure, months of outperformance has made Indian stocks the most expensive in Asia on an earnings-based valuation. This has yielded caution from some investors, with the Reserve Bank of India’s interest-rate hikes also a factor that could weigh on market outlook.

China, on the other hand, has potential for a big upswing once the economy reopens from Covid restrictions. Its stocks listed in Hong Kong are trading at the cheapest ever by one metric.

Still, investors focused on India’s longer-term growth story hold strong convictions. Economists surveyed by Bloomberg expect the economy to grow about 7% in the fiscal year that ends next March, more than twice the pace of China’s in 2022.

Mark Mobius, co-founder of Mobius Capital Partners, said India’s large and younger population coupled with a favorable environment toward private enterprise means it will be growing faster than China in the coming years.

‘India’s Moment’

Major global companies have been taking advantage of the South Asian country’s industrial prowess. Apple Inc., which has long manufactured most of its iPhones in China, began making its new iPhone 14 in India sooner than anticipated following a smooth production rollout. Citigroup Inc. is targeting India as one of its top markets to expand globally.

“We think this is really India’s moment. A lot of people are invested,” said Julia Raiskin, head of Asia Pacific markets at Citi.

With its rising market clout, India’s weight in the MSCI Emerging Markets Index has increased by almost 7 percentage points in the two years through September. Meanwhile, that of Chinese and Hong Kong stocks combined has fallen by more than 10 points.

Regardless of how the Chinese market performs, abrdn Plc.’s Kristy Fong said India’s attractiveness to global investors remains a long-term trend.

“As a stock market, India is home to some of the highest quality companies in the region, with some of the most capable management teams anywhere in Asia,” she said. “Segments where India excels include financial services, consumer goods and services and health care.”

Most Read from Bloomberg Businessweek

The Unstoppable Dollar Is Wreaking Havoc Everywhere But America

Jay Powell Needs Investors to Lose Money

The World Sees Brazil’s Election as a Climate Flashpoint. Brazilians Have Other Concerns

Twitter Is in This Mess Because Jack Dorsey Was Too Busy Being a Bitcoin Influencer

Cash Retakes Its Crown as the Fed Wrestles With Inflation

©2022 Bloomberg L.P.



China’s Xiaomi says will protect business interests after assets frozen in India

Chinese smartphone maker Xiaomi Corp on Sunday said it was “disappointed” with an Indian order that froze $682 million of its assets and would continue to protect its interests. An Indian appellate authority on Friday confirmed an April order by India’s federal financial crime fighting agency, the Enforcement Directorate, to seize 55.51 billion rupees, saying a probe found Xiaomi had made illegal remittances to foreign entities by passing them off as royalty payments.


‘Stocks Are Looking Increasingly Cheap,’ Says J.P. Morgan; Here Are 2 Names to Consider

The stock market is often a game in reverse psychology. That is, when the mood gets too euphoric, it’s often a sign it is time to sell. Likewise, when sentiment hits the skids, that could be the ultimate signal the time is right to load up the truck. And on that subject, J.P. Morgan’s Marko Kolanovic thinks we are at – or at least near – the bottom. The firm’s global market strategist believes the Fed’s hawkish stance has left stocks “very oversold,” and while inflation remains persistently high

Associated Press

India launches 5G services, Modi calls it step in new era

Prime Minister Narendra Modi launched 5G services in India on Saturday, calling it a “step towards the new era.” Modi launched the much-awaited services that aim to provide seamless coverage, high data rate, less delay in internet connectivity and highly reliable communications in presence of India’s telecom leaders in New Delhi.


Brazil’s Lula Nears Outright Win on Sunday, Polls Show

(Bloomberg) — Just one day before votes are cast, the final electoral polls on the Brazilian presidential race suggest former president Luiz Inácio Lula da Silva could clinch an outright victory in the first round.Most Read from BloombergCredit Suisse CEO Seeks to Calm Markets as Default Swaps ClimbGazprom Halts Gas Supplies to Italy in Latest Energy BattleGet Ready for Another Bear-Market Rally, Strategist Emanuel SaysTesla Deliveries Miss Estimates, Slowed by Logistic SnarlsOPEC+ to Consider

Associated Press

India wins T20 series with 16-run victory over South Africa

David Miller’s second Twenty20 century went in vain as India beat South Africa by 16 runs on Sunday to win the three-match series with an unassailable 2-0 lead. Miller scored 106 not out off 47 balls after South Africa had been reduced to 47-3 in reply to India’s 237-3 in the second T20.


U.S. defense secretary sees no imminent invasion of Taiwan by China

WASHINGTON (Reuters) -U.S. Defense Secretary Lloyd Austin said on Sunday he sees no imminent invasion of Taiwan by China but said China was trying to establish a “new normal” with its military activities around the island. A visit to Taiwan early in August by U.S. House of Representatives Speaker Nancy Pelosi enraged China, which subsequently launched military drills near the island.

Yahoo Finance

What all that stealing says about America

Why are people stealing these days? That’s a tough one. To some degree it’s a reflection of our times. Simply put, America’s social contract is straining.

Yahoo Finance

Fed speak of the week: A unified, resolute stance in the inflation fight

Following the Federal Reserve’s super-sized interest rate hike and another hot read on inflation, a slew of Fed speak this week indicated that central bank officials are unified in the task of cooling inflation — even in the face of global market turmoil.


Putin’s War Machine Funding Is Unscathed by Latest Sanctions

(Bloomberg) — The US sanctioned hundreds of Russian officials, lawmakers, family members and businesses Friday in what Treasury Secretary Janet Yellen called a “sweeping action,” but in reality the measures will have little practical effect on President Vladimir Putin’s ability to sustain his country’s economy with oil and gas revenue.Most Read from BloombergCredit Suisse CEO Seeks to Calm Markets as Default Swaps ClimbGazprom Halts Gas Supplies to Italy in Latest Energy BattleGet Ready for Ano

Ukrayinska Pravda

Russian suicide drone attacks Kryvyi Rih, hitting a school

ALONA MAZURENKO – SUNDAY, 2 OCTOBER 2022, 01:58 Russian forces used a suicide drone to attack the city of Kryvyi Rih (Dnipropetrovsk Oblast) on the night of 1-2 October, hitting a civilian infrastructure target.


Analysis-Under water: how the Bank of England threw markets a lifeline

Calls to the Bank of England saying some British pension funds were struggling to meet margin calls began on Monday. Wild gyrations in financial markets in response to a government “mini-budget” on Sept. 23 meant that swathes of Britain’s pension system were at risk, raising widespread concerns about the country’s financial stability. British Finance Minister Kwasi Kwarteng’s statement had included dramatic plans to slash taxes and pay for it with borrowing which sent government bond yields soaring.

It’s Time to Buy Tech Again. Here Are 20 Stocks to Start With.

Previous article

What all that stealing says about America

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *