Stocks in China and Hong Kong have seen a massive sell-off of $4.8 trillion in market capitalization since 2021, which is more than the value of the Indian stock market. This decline has not been mirrored in India, where the National Stock Exchange (NSE) has been growing steadily. In fact, the NSE overtook the Hong Kong Stock Exchanges and Clearing to become the fourth largest stock exchange in the world in January, with a value of $4.63 trillion, making it the third largest in Asia. This highlights the significant growth and traction that Indian stocks have gained in recent years compared to declines in China and Hong Kong.
Mainland China’s CSI 300 index has seen declines for three consecutive years, with a decrease of 11.4% last year. Hong Kong’s Hang Seng index performed even worse, experiencing its fourth consecutive decline and ending the year 13.8% lower. Both indexes were among the worst performers in the Asia-Pacific region last year. The worries surrounding China’s property sector have also had an impact on the Hong Kong markets, as many Chinese real estate stocks listed on the HKEX have faced challenges.
China has set its growth target at 5% for 2024, but analysts have expressed skepticism about the country’s ability to achieve this goal. S&P Global Ratings forecasted China’s GDP to grow at 4.6% in 2024, a slower rate than the previous year. Factors such as weak consumption, property weakness, and potential deflation are seen as risks to China’s economic growth. Former HKEX CEO Nicolas Aguzin noted that lack of confidence in China, high interest rates, and geopolitical factors are contributing to lower valuations and fewer new listings on the exchange.
In contrast to China and Hong Kong, Indian stocks have rallied in the midst of optimism about the country’s growth. The Nifty 50 index in India has risen for eight consecutive years, with a 20% gain in 2023. Research from HSBC revealed that India’s NSE has surpassed the Shanghai Stock Exchange to become the second largest globally in terms of monthly transaction volume, trailing behind the Shenzhen Stock Exchange. India also led in the number of initial public offerings (IPOs) in 2023, with 220 IPOs raising $6.9 billion in proceeds. This marked a 48% increase in deal activity from the previous year.
While India’s IPO market flourished, the number of IPOs in China’s A-share market saw a decline in the first quarter of 2024, with the fewest number of IPOs and smallest proceeds since 2020. Hong Kong also experienced a drop in IPO activity, with only 10 IPOs during the period and two crossing the $100 million mark, marking the lowest proceeds since 2010. India’s prominence in the IPO market has increased significantly, accounting for 27% of global IPOs in the first quarter of 2024. This trend highlights India’s emergence as a leading IPO market by deal volume, propelled by strong investor interest and confidence in the country’s growth prospects.
