The rebound of the Indian stock market is pushing the weight of its MSCI emerging market index, causing global fund managers to fall into a dilemma: either look at his relatively open and divert, or buy it at a more outrageous price.Most people think that the latter is very risky and is looking for other options. Some people invest in smaller funds in India, while others will invest in other emerging markets.New Delhi Investment
This trend is driven by India’s strong profit for many years. At the same time, the weight of the Indian stock market is increasing in the MSCI emerging market index of emerging market funds in the world.India’s weight in MSCI emerging markets has soared from 8%four years ago to 19%. Analysts of Nuvama Alternative & Quantitative Research predict that by the end of this year, this weight will exceed 22%.
Part of the reason for reducing the Indian stock market is that some other stock markets are cheaper and more energetic, and the cost of entry and exit of funds in India may be very high.Surat Stock
Fund managers need to quickly buy stocks of Indian companies in order to keep up with their increasing influence in the index.LSEG data shows that the average 12 -month price -earnings ratio of large and medium -sized companies in India is 24 times, which is the most expensive in the main market.In contrast, India’s blue -chip stocks have a much lower valuation, the same price -earnings ratio is 17 times, and the price -earnings ratio of large Malaysian stocks is 15 times.
According to data from HSBC and COPLEY Fund Research, many funds have not chosen to buy, which has made India the country with the largest reduction of holdings in emerging market funds.For example, for Gary Tan and his customers of ALLSpring Global Investments, the valuation is the crux of the valuation. In the past few years, he has reduced its holdings of Indian stocks.Tan said: "We are optimistic about the long -term prospects, but they are very cautious about the valuation level."
For a long time, the valuation of the Indian stock market has been relatively high, winning the global market.Some investors are now cautious about the balance of risk returns.Since mid -2020, the India’s Nifty 50 Index has risen by 145%, the S & P Indian Sensex Index has soared by 136%, and the S & P 500 index has risen 78%in the same period.
However, although foreign investors have been continuous buyers of Indian stocks so far this year and 2023, the flow of funds and investors’ emotions are beginning to change.ICICI Securities data shows that in the first half of this year, foreign investment in Indian SMEs was much higher than that of large -cap stocks.And in August Exchange data showed that foreign capital sold $ 662 million in stocks.According to iCici Securities, the Indian stocks held by foreign investors are about 16%, which is the lowest level in 10 years.Udabur Stock
It is certain that a large number of bulls and funds are flowing in, and these funds are not based on the emerging market index.Howie Schwab, a investment portist manager responsible for the growth of emerging markets, said that global investors are increasingly interested in India, not just investors who have business in emerging markets.
Vivian Lin Thursston, the investment portfolio manager of William Blair’s growth strategy, said the valuation itself is not necessarily enough to become a reason for investors to turn to other markets.She said: "If I sell India, do I still have other attractive investment opportunities? There are not many answers at present. This is a question I am trying to solve."
However, the funds flowing into the Malaysia and Indonesia markets show that investors have begun to cast their sights elsewhere.At the same time, foreign investors are selling expensive Indian secondary market stocks and invested in new stocks in the first -level market in order to seek lower investment costs and higher returns.
A bank’s report shows that foreign investors have purchased more than $ 6 billion in stocks in the Indian -level market this year, the highest level since 2021."Foreign investors are unwilling to put their funds into the secondary market for a long time, and they have seen a better and faster return prospect in the first -level market.The reason is that the prospect of profit growth is slow. "
In contrast, foreign investors are attracted by cheap stocks in the Indian -level market.Jon Withaar, director of the Asian Special Situations, said that the valuation of the first -level market is often low because there is a lack of competition from retail investors, indexes, ETFs, and most types of institutional investors.
James Cook, the global investment director of the American Fund Management Company, said, "India’s economic growth is not a secret. When you have such a consensus and the prospects seem to be benign, investors may fall into the trap and treat any potential trap for any potential trap.A turn, such as paying too high to enter the market. "He reduced its holdings of Indian stocks and waited for the price to fall further before buying.
Lucknow Investment