India Overtakes Hong Kong to Become Fourth-largest Stock Market

Bloomberg has reported that the Indian stock market has surpassed Hong Kong to claim the fourth position among global equity markets. The total value of shares listed on Indian exchanges reached USD 4.33 trillion, edging past Hong Kong’s USD 4.29 trillion as of the latest market close.

India achieved a stock market capitalization exceeding USD 4 trillion for the first time on December 5, 2023, with nearly half of this milestone being accomplished in the preceding four years. The leading stock markets globally are currently held by the U.S., China, and Japan.

Investors in Indian stocks enjoyed a robust performance over the past 12 months, despite occasional turbulence. In the calendar year 2023, both the Sensex and Nifty indices recorded gains of 17-18%, contrasting with a modest 3-4% increase each in 2022. Conversely, Hong Kong’s Hang Seng Index experienced a cumulative decline of 32-33% in the same period.

This positive trajectory for Indian stocks can be attributed to factors such as strong GDP growth forecasts, manageable inflation levels, political stability at the central government level, and indications that central banks worldwide have concluded their monetary policy tightening.

Furthermore, the influx of funds from foreign portfolio investors (FPIs) played a crucial role in propelling Indian stocks to all-time highs. FPIs, once again becoming net buyers in India’s stock market, contributed to the recent peaks in benchmark stock indices.

India, having positioned itself as an alternative to China, attracted significant capital from global investors and companies due to its stable political environment and a consumption-driven economy that stands among the fastest-growing on the global stage.

This surge in Indian stocks coincided with a notable downturn in Hong Kong, where influential and innovative Chinese firms are listed. The decline in Hong Kong’s appeal as a global growth engine is attributed to factors such as stringent anti-COVID-19 measures, regulatory crackdowns on corporations, a property-sector crisis, and geopolitical tensions with the West. Consequently, new listings in Hong Kong have dwindled, causing the Asian financial hub to lose its standing as one of the world’s busiest venues for initial public offerings (IPOs).