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India Claims Seventh Position as Most Traded Stock Market in the World, Surpassing Hong Kong

Lanon Wee

By the end of November, the National Stock Exchange of India was worth $3.989 trillion, compared to Hong Kong's $3.984 trillion. The Indian Nifty 50 index has advanced by a hefty 16% this year, and is on track for its eighth successful year in a row. In contrast, Hong Kong's Hang Seng index has dropped by 17% in 2020, making it the poorest performing major market in the Asia-Pacific region. The total market capitalization of India's National Stock Exchange has topped that of Hong Kong's to become the seventh largest in the world amid mounting confidence surrounding India's economic future. At the end of November, India's market capitalization was recorded at $3.989 trillion compared with Hong Kong's $3.984 trillion, as per information from the World Federation of Exchanges. Furthermore, India's Nifty 50 index registered another high on Tuesday, having risen 16% so far in the present year and pointing towards an eighth consecutive year of positive returns. In stark contrast, Hong Kong's Hang Seng index has dropped 17% during the same time frame. India has been the standout stock market in Asia-Pacific this year, mainly due to increased liquidity, higher domestic investment and better macroeconomic conditions, with U.S. Treasury yields declining. India, the world's most populous country, is expected to see a victory for the ruling nationalist Bharatiya Janata Party in the general election taking place next year. A client note issued by HSBC strategists stated: "Opinion polls and recent state elections are indicating that the incumbent BJP-led government could gain a decisive win in the general election, which could trigger a bull run in the first three to four months of the year due to anticipation of continued policy." According to HSBC, the best-positioned sectors for the coming year are banks, health care and energy, while sectors like autos, retailers, real estate and telecoms are also relatively well-placed for 2024. Meanwhile, HSBC has categorized fast-moving consumer goods, utilities and chemicals as unfavorable. The Hang Seng index in Hong Kong is set to decline for the fourth year in a row, lagging behind other major Asia-Pacific equity markets. Last week, Moody's reassessed its view of Hong Kong, shifting their outlook from stable to negative due to the close connection Hong Kong has with China in terms of finances, politics, institutions and the economy. This downgrade came shortly after Moody's revised their outlook on China's government credit ratings from negative to stable. In early November, the Hong Kong government revised its economic growth outlook for 2023 downwards from a forecast of 4% to 5% to 3.2%. Geopolitical tensions, tight financial conditions, weak consumer sentiment and falling tourism have all weighed heavily on investments, exports, and consumption. Economists at DBS have estimated that the city's economy will be on a path of soft landing in 2024, with annual real GDP growth projected to drop to around 2%, supported by a revival in mainland tourism, which is essential to the retail and catering industries. In contrast, China has set a growth target of 5% for 2023, and its third quarter GDP reading of 4.9% has raised hopes that it will be able to meet or even exceed this target.

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