Wall Street Giants Make Historic Market Shift, Favoring India Over China

India, led by Prime Minister Narendra Modi, has significantly expanded its infrastructure to attract global capital and shift supply lines away from Beijing.

Investors are withdrawing billions of dollars from China, redirecting their focus to India. Wall Street giants like Goldman Sachs Group and Morgan Stanley are endorsing India as the primary investment destination for the next decade.

Marshall Wace, a $62 billion hedge fund, has identified India as its largest net long bet after the US in its flagship hedge fund. A division of Zurich-based Vontobel Holding AG has designated India as its top emerging-market holding, and Janus Henderson Group Plc is reportedly exploring fund-house acquisitions in the country.

“People are interested in India for several reasons – one is simply it’s not China,” says Vikas Pershad, Asian equities portfolio manager at M&G Investments in Singapore. He emphasizes that there is a genuine long-term growth story in India, contributing to the increasing interest from investors.

Aniket Shah, the global head of environment, social, and governance practice at Jefferies Group LLC., noted that a recent investor call focused on India was one of the firm’s most well-attended sessions.

India, under Prime Minister Narendra Modi, has significantly expanded its infrastructure to attract global capital and shift supply lines away from Beijing. In the US exchange-traded fund market, the primary fund investing in Indian stocks witnessed record inflows in the final quarter of 2023.

In contrast, the four largest China funds together experienced outflows of nearly $800 million. Active bond funds have been allocating 50 cents into India for every dollar withdrawn from China since 2022, as per EPFR data.

Mark Matthews, the head of Asia research at Bank Julius Baer in Singapore, highlighted the changing dynamics, stating, “In terms of index weights, China would be lower and India bigger. That’s the direction.”

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