MUMBAI, MAHARASHTRA, INDIA – 02/01/2024: A circular metal emblem with the words ‘this sign indicates stock purchase’ is seen near the pavement of a street near the Bombay Stock Exchange (BSE) in Mumbai.
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Stocks in China and Hong Kong have sold a massive $4.8 trillion in market capitalization since 2021, which HSBC says is higher than the value of the Indian stock market.
The statistic does not bode well for either China or Hong Kong, especially considering that India’s national stock market has only grown over the same period.
According to data from the World Federation of Exchanges, the NSE surpassed the Hong Kong Stock Exchange and Clearing in January to become the fourth largest bank in the world and is worth $4.63 trillion, making it the third largest bank in the world. Asia.
This is indicative of how much traction Indian stocks have gained in recent years, in contrast to declines seen in both China and Hong Kong.
Mainland China’s CSI 300 Index has fallen for three consecutive years, ending last year down 11.4%. The one in Hong Kong Hang Seng Index performed even worse, with 2023 recording its fourth consecutive decline, ending the year down 13.8%. Both posted the weakest performances among major Asia-Pacific indexes last year.
China’s concerns hit Hong Kong markets
China’s beleaguered real estate sector has been a source of concern for investors, which has also affected Hong Kong. Many Chinese real estate stocks included Evergrande Group AND Country garden they are listed on the HKEX.
China has set its growth target at 5% for 2024, but analysts are skeptical that the world’s second-largest economy can reach the target. S&P Global Ratings said last week it expects China’s GDP to grow 4.6% in 2024, slower than the 5.2% rate for 2023.
“Our forecasts take into account continued weakness in the real estate sector and modest support from macroeconomic policy. Deflation remains a risk if consumption remains weak and the government responds by further stimulating manufacturing investment,” Louis wrote in a message to a client Kuijs, chief economist for Asia-Pacific at S&P Global Ratings. Note.
Former HKEX CEO Nicolas Aguzin told CNBC in March that a lack of confidence in China, high interest rates and geopolitics are affecting valuations and reducing the number of new stock listings.
India: An investor favorite
Indian stocks rallied amid general optimism about the country’s growth. The country’s landmark Nifty 50 Index it has grown for eight consecutive years, posting gains of 20% in 2023.
HSBC research also showed that the Indian National Stock Exchange has surpassed the Shanghai Stock Exchange to become the second largest stock exchange globally in terms of monthly transaction volume. But it still lagged behind the Shenzhen Stock Exchange, which took first place.
According to research by EY India, Indian bourses also saw the highest number of initial public offerings in 2023. This is despite the subdued environment for IPOs, especially in Asia. According to EY, India saw 220 IPOs last year, raising proceeds of $6.9 billion. This is a 48% increase in deal activity from 2022.
“While the Chinese market has slowed significantly, India has emerged as a standout performer,” George Chan, EY global IPO leader, said in a separate research report.
Deals in India accounted for just 6% of IPOs globally in 2019, but Chan said the country now accounts for 27% as of the first quarter, “taking it to the position of the world’s leading IPO market by deal volume ”.
In contrast, EY data showed that there were 30 IPOs in China’s A-share market in the first quarter, raising $3.4 billion. This is the fewest number of IPOs and smallest proceeds since 2020. Hong Kong recorded just 10 IPOs during the three-month period and only two exceeded $100 million in deals, for the lowest proceeds since 2010 .