Key Insights
- India’s total stock market valuation overtook Hong Kong’s this week to become 7th largest globally, reflecting strong economic optimism
- India’s benchmark Nifty 50 index has surged 16% in 2022, while Hong Kong’s Hang Seng plunged 17% amid China uncertainties
- India heads into 2023 elections widely expected to extend rule of business-friendly BJP party, further boosting market confidence
Mumbai – India and Hong Kong have long vied for influence as leading Asian financial hubs, but their diverging trajectories of late could not be more stark. This week, a symbolic milestone was reached as the total value of publicly traded companies in India’s stock markets ($3.989 trillion) overtook that of Hong Kong ($3.984 trillion) for the first time.
Propelled by buoyant optimism about the country’s economic potential, India’s Nifty 50 index has surged over 16% so far in 2023, notching yet another record high on Tuesday.
By contrast, Hong Kong’s Hang Seng index has plummeted 17% amidst a prolonged slump.
There’s a real sense in India that the economic ingredients are coming together in just the right formula, said Amit Shanbag, a Mumbai-based business columnist. Modi’s pro-growth policies, a booming middle class, and new links to global supply chains are driving tremendous confidence.
India Scales New Highs as Hong Kong Sinks Lower
India is hoping to leverage such momentum as it heads into national elections next year, where the incumbent BJP party is widely predicted to secure another commanding victory. Their business-friendly platform could unlock further gains if policy continuity prevails.
Meanwhile, in Hong Kong, sentiment remains mired by the city’s deepening integration into mainland China’s political and economic orbit. Moody’s recent downgrade reflects eroding faith in Hong Kong’s traditional autonomy, already hindered by Beijing’s imposition of a sweeping national security law in 2020.
Tourism and trade have also taken a heavy blow, as China’s rigid zero-COVID policies continue to stifle cross-border travel. “The benefits Hong Kong long enjoyed as gateway to China are fading,” said economist Chen Yu of City University Hong Kong. “And global investors are taking notice.”
As markets rebalance, India seems primed to take up the mantle as Asia’s next rising star. But in unpredictable times, its ascent could prove volatile. “One black swan event could change fortunes quickly,” Shanbag cautioned.
For now, though, the numbers tell a lopsided story. And this week, it’s an advantage for Mumbai.