India’s stock market has overtaken Hong Kong’s to become the world’s seventh largest in value as optimism about the country’s economic prospects grows.
The total market capitalization of India’s national bourse stood at $3.989 trillion at the end of November, compared with $3.984 trillion in Hong Kong, according to data from the World Federation of Stock Exchanges.
India’s Nifty 50 hit another record high on Monday. It has jumped nearly 16% so far this year and is headed for an eighth straight year of gains. In contrast, Hong Kong’s benchmark Hang Seng index fell by 18% year-on-year.
India has been an exceptional market in the Asia-Pacific region this year. Increased liquidity, greater domestic participation and improving dynamics in the global macro environment in the form of falling US Treasury yields have all supported the country’s equity markets.
The world’s most populous country is also heading into next year’s general election, which analysts say could be another victory for the ruling nationalist Bharatiya Janata Party.
HSBC said banks, healthcare and energy are the best-placed sectors for next year.
Sectors such as autos, retail, real estate and telecoms are also relatively well positioned for 2024, while FMCG, utilities and chemicals are among those categorized by HSBC as underperforming.
Hong Kong lags behind
Hong Kong’s Hang Seng index is poised for a fourth year of decline and is the worst-performing of all major Asia-Pacific stock markets.
Last week, Moody’s downgraded its outlook for Hong Kong from stable to negative, citing the city’s financial, political, institutional and economic ties to mainland China. The downgrade came soon after Moody’s cut its outlook on the Chinese government’s credit rating to negative to stable.
In early November, the Hong Kong government said it expected the economy to grow by 3.2% in 2023, lowering its GDP growth outlook to 5% from an August forecast of 4%.
The city government warned that rising geopolitical tensions and tight financial conditions continued to weigh on investment, goods exports and consumer sentiment. Consumer confidence also suffered in Hong Kong.
“Hong Kong’s economy is poised for a soft landing in 2024 as annual real GDP growth moderates to around 2% from 3.5% in 2023,” DBS economists said.
“At the heart of this recovery is the revival of mainland tourism, the strengthening of retail and catering.”
China has set a growth target of 5% for 2023. Its GDP came in at 4.9% in the third quarter, raising hopes that the world’s second-largest economy will meet or even beat expectations.
