India overtakes Hong Kong to become the world’s seventh largest stock market

The market capitalization of Indian stocks has surpassed that of Hong Kong to become the seventh largest market in the world as optimism grows about the country’s economic prospects.

As of the end of November, the total market capitalization of India’s National Stock Exchange was $3.989 trillion compared to Hong Kong’s $3.984 trillion, according to data from the World Federation of Stock Exchanges.

India’s Nifty 50 index hit another record high on Tuesday. It has jumped 16% so far this year and is on track for an eighth straight year of gains. In contrast, Hong Kong’s benchmark Hang Seng Index has fallen by 17% since the beginning of the year so far.

India has been a prominent market this year in the Asia Pacific region. Increased liquidity, increased domestic participation and improving dynamics in the global macro environment in the form of lower US Treasury yields have all boosted the country’s equity markets.

The world’s most populous country is also heading to general elections next year, which analysts expect could be another victory for the ruling nationalist Bharatiya Janata Party.

“For the general elections, exit polls and recent state elections suggest that the incumbent BJP-led government may score a decisive victory, which could lead to higher prices in the first three to four months of the year amid expectations of continued politics,” HSBC said. The strategists said in a client note.

HSBC said banking, healthcare and energy are the best-placed sectors for next year.

Sectors such as automobiles, retailers, real estate and telecommunications are also relatively well placed for 2024, while fast-moving consumer goods, utilities and chemicals are among those rated as unfavorable by HSBC.

In early November, the Hong Kong government said it expected the economy to grow by 3.2% in 2023, trimming its GDP growth forecast from 4% to 5% in August.

The city government warned that rising geopolitical tensions and difficult financial conditions continue to impact investments, goods exports and consumption sentiment. Consumer confidence in Hong Kong also suffered.

“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.

“Critical to this recovery is reviving mainland tourism and fortifying the retail and restaurant sectors.”

China has set a 5% growth target for 2023. GDP in the third quarter reached 4.9%, raising hopes that the world’s second-largest economy will meet or even exceed expectations.