In a notable shift in the global investment landscape, India has officially surpassed China in the MSCI investible large-, mid-, and small-cap equities index. According to a report by Morgan Stanley, India’s weight in this crucial index has reached 2.35 percent, compared to China’s 2.24 percent. This development reflects India’s steady economic growth and increased investment inflows.
Analysts from Morgan Stanley, led by Jonathan Garner, noted that India’s market performance, coupled with improved liquidity and new stock issuances, positions the country for continued growth in market share. The firm emphasized that India is likely to maintain this upward trajectory, driven by its strong economic fundamentals.
India’s gross domestic product (GDP) growth is currently in the low teens, significantly outpacing China’s economic expansion, which has been markedly slower. This disparity is contributing to a pronounced difference in the earnings growth environments of the two nations, according to the brokerage.
Notably, China’s index weight peaked in early 2021, but it has since seen a decline, coinciding with challenges in its economy and a struggling property sector. In contrast, India’s stock market has demonstrated impressive resilience this year, with benchmark indices such as the NSE Nifty 50 and S&P BSE Sensex rising by 17 percent and 15 percent, respectively.
Earlier this month, Morgan Stanley projected that India would soon surpass China in the MSCI Emerging Markets index as the Indian stock market rally appears to be in its early stages. Increased weightage in MSCI indexes is expected to attract additional investment inflows into India’s markets, further solidifying its position.
This shift marks an important moment in the evolving dynamics of the Asian economies, highlighting India’s ascendance in the global financial arena.
