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Pedestrians make their way to the Chhatrapati Shivaji Terminus train station at dusk in Mumbai, India, on Wednesday, Oct. 4, 2023.
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India has surpassed Hong Kong to become the world’s seventh-largest stock market, signaling growing optimism about the country’s economic future.
By the end of November, the National Stock Exchange of India’s total market capitalization reached $3.989 trillion, surpassing Hong Kong’s $3.984 trillion, according to data from the World Federation of Exchanges.
The Nifty 50 index in India hit another all-time high on Monday, with a nearly 16% increase so far this year and on track for its eighth consecutive year of gains. In comparison, Hong Kong’s Hang Seng index has fallen 18% year to date.
India has emerged as a standout market in the Asia-Pacific region this year, with increased liquidity, greater domestic participation, and improved global macroeconomic dynamics, including falling U.S. Treasury yields, all contributing to the country’s strong stock market performance.
India is also heading into general elections next year, with analysts predicting another victory for the ruling Bharatiya Janata Party.
“For the general election, opinion polls and recent state elections indicate that the incumbent BJP-led government may secure a decisive win, which could trigger a bull run in the first three to four months of the year on expectations of policy continuity,” HSBC strategists said in a client note.
HSBC identified banks, healthcare, and energy as the best-positioned sectors for next year.
Sectors such as autos, retailers, real estate, and telecoms are also relatively well positioned for 2024, while fast-moving consumer goods, utilities, and chemicals are among those considered unfavorable by HSBC.
In early November, the Hong Kong government revised its GDP growth forecast for 2023 from 4-5% to 3.2%, citing increasing geopolitical tensions and tight financial conditions affecting investments, exports, and consumer confidence.
Economists at DBS predict a ”soft landing” for Hong Kong’s economy in 2024 with an estimated annual real GDP growth of about 2%
“Central to this recovery is mainland tourism revival, fortifying retail and catering sectors.”
China has set a growth target of 5% for 2023, and its third-quarter GDP came in at 4.9%, providing hope that the world’s second-largest economy will meet or exceed expectations.
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