Study shows wealth and pension funds favor India over China
A recent study by London-based think tank OMFIF reveals that global pension and sovereign wealth managers are increasingly choosing India over China for investments. The survey included 100 funds managing a whopping $26 trillion in assets. It showed that nearly 40% of investors found India to be the most attractive emerging market, while less than a quarter opted for China.
India's appeal grows amid global optimism
This shift in preference highlights the growing global optimism toward India, as concerns over China's economic recovery and geopolitical tensions with the West continue to rise. Clive Horwood, Deputy Chief Executive Officer at OMFIF, explained that India is well positioned to benefit from its strong growth, demographics, and diversification of global supply chains. He also mentioned that India is becoming more open to foreign investors, as evidenced by the country's assets being added to JPMorgan's bond index in June.
Hesitation on China due to regulation and geopolitics
On the other hand, the OMFIF study exposed a sense of hesitation among surveyed funds when it comes to China. The report stated, "No surveyed fund has a positive outlook for its economy or expects higher relative returns from Chinese assets." Regulations and geopolitics were highlighted as the main reasons why most respondents are holding back from investing in China. If they do invest, it's often because it's part of the benchmark gauges.
Benchmark indices of both countries show contrasting trajectories
This reluctance is evident in the performance of benchmark indices. China's CSI 300 Index is down 10.4% year-to-date (YTD), while the S&P BSE Sensex Index in India is up 10.33% YTD. Furthermore, today, China's CSI 300 Index dropped nearly 1%, heading toward its lowest closing point since February 2019. In contrast, Indian equities showed enthusiasm as the Sensex rose by 0.85%, inching closer to its new peak.
