With global emerging markets again under pressure, India might seem an unlikely port in the storm. Promises of far-reaching economic reforms under Prime Minister Narendra Modi are still to be delivered, while hopes of a rapid investment-led recovery under his leadership remain unfulfilled.
But with China’s equity market convulsed by a painful sell-off, India finds itself the happy recipient of investment searching for safety in the developing world.
The benchmark Sensex index has lost more than 2 per cent over the past two days, reflecting investor unease over much larger falls in China. But the index has eked out a 0.6 per cent increase over the past three months. Though not likely to set pulses racing, this makes India the only country in Asia to see markets rise over that period.
Since the Chinese sell-off began on July 15, the Shanghai index has dropped nearly 30 per cent. Indian stocks, meanwhile, are up around 5 per cent.
“There was some reallocation out of India and towards China earlier this summer. That has now stopped, and some of it seems to be coming back,” says Rashesh Shah, the founder of Edelweiss, a Mumbai financial services group. “Investors I speak to see China as a lot riskier now.”-from FT
2 replies on “Fearful China Investors look to India”
India has tremendous potential is a well known fact. It actually can command better respect than even US stock markets and can rule the world. However, the only negative for the country are governance of many contradictions and deep rooted corruption. If we get over these, Indian GDP can be in double digits, markets reach dizzy heights. Till then, and that is a fairly long time, we will struggle.
* replace ‘GDP growth’ for GDP.