India surpasses China in a key MSCI equities index, driven by strong economic growth and market performance, according to Morgan Stanley’s report.
BollywoodFever: For the first time ever, India has overtaken China in a key MSCI equities index, marking a major milestone in global markets. India’s weight in the MSCI investible large-, mid-, and small-cap index has risen to 2.35%, surpassing China’s 2.24%, according to a Morgan Stanley report on Tuesday.
Morgan Stanley analysts, led by Jonathan Garner, attribute India’s rise to steady economic growth, new market issuances, and improvements in liquidity.
India’s nominal GDP growth rate is currently in the low teens, more than three times China’s rate, creating a significant divergence in earnings growth between the two countries.
India will continue to gain share due to market outperformance, new issuances, and liquidity improvements,” the analysts noted.
China’s weight in the index peaked in early 2021, but it has since declined due to concerns over the economy and the property sector.
In contrast, India’s stock market has performed strongly this year, with the NSE Nifty 50 and S&P BSE Sensex rising 17% and 15% respectively, positioning India among the best-performing global markets.
Earlier this month, Morgan Stanley forecasted that India would also overtake China in the MSCI Emerging Markets index, as India’s stock rally is only halfway through, according to analysts.
Meanwhile, China’s Shanghai Composite index has fallen by about 9% this year, highlighting the contrast between the two major economies.
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