Historic markets shift: Wall Street snubs China for India as Beijing flounders

In a historic transition witnessed in global markets, investors withdraw billions of dollars from China’s slowing economy, marking a remarkable shift from two decades ago when China was viewed as the world’s foremost growth opportunity.

A substantial portion of these funds is now being directed towards India, with major Wall Street players such as Goldman Sachs Group Inc. and Morgan Stanley championing the South Asian nation as the premier investment destination for the coming decade.

The growing momentum is sparking a surge of interest akin to a gold rush. Marshall Wace, a $62 billion hedge fund, has designated India as its largest net long position after the US in its flagship hedge fund. Similarly, an arm of Zurich-based Vontobel Holding AG has elevated the country to its top emerging-market holding, while Janus Henderson Group Plc is actively considering acquisitions of fund houses. Even traditionally cautious retail investors in Japan are turning their attention to India, reducing their exposure to China in the process, according to reports.

Brushing aside risks around overpriced shares, upcoming elections and regulatory uncertainty, India’s $4 trillion stock market reportedly pulling in billions of dollars of domestic and foreign money as investors flock to a fast-growing alternative to China.

India’s allure is rising this year as global investors seek substitutes for sickly Chinese markets and as expectations grow that national elections this year will see current Prime Minister Narendra Modi return for a rare third term.

“People are interested in India for several reasons — one is simply it’s not China,” Vikas Pershad, Asian equities portfolio manager at M&G Investments in Singapore told Bloomberg. “There’s a genuine long-term growth story here.”

Investors are closely monitoring the diverging paths of two of Asia’s prominent nations. India, recognised as the world’s fastest-growing major economy, has significantly enhanced its infrastructure under the leadership of Prime Minister Narendra Modi.

Meanwhile, China is contending with persistent economic challenges and experiencing a growing divide with the Western-led international order.

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