China and Hong Kong sold off nearly $5 trillion, worth more than India’s stock market

MUMBAI, MAHARASHTRA, INDIA – 2024/02/01: A circular metal emblem with the words “This sign indicates purchase of shares” is seen near the sidewalk of a street near the Bombay Stock Exchange (BSE) in Mumbai.

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Stocks in China and Hong Kong have sold a massive $4.8 trillion in market capitalization since 2021, which HSBC says is higher than the value of the Indian stock market.

This statistic does not bode well for either China or Hong Kong, especially when India’s National Stock Exchange has only grown over the same period.

The NSE overtook Hong Kong Stock Exchanges and Clearing to become the world’s fourth-largest market in January, according to data from the World Federation of Securities Exchange, and its value stands at $4.63 trillion, making it the third in Asia.

This shows how Indian stocks have gained ground in recent years, in contrast to declines in China and Hong Kong.

Mainland China’s CSI 300 index has fallen for three straight years, closing 11.4% lower last year. that of Hong Kong Hang Seng Index The performance is even worse, with 2023 being its fourth consecutive decline, ending the year down 13.8%. Both were the worst performers among major indices in the Asia-Pacific region last year.

Chinese worries hit Hong Kong markets

China’s struggling real estate sector is a source of concern for investors, which has also affected Hong Kong. Many Chinese real estate stocks, including Evergrande Group And Country garden are listed on the HKEX.

China has set its growth target at 5% for 2024, but analysts are skeptical about the ability of the world’s second-largest economy to achieve this goal. S&P Global Ratings said last week it forecast China’s GDP growth of 4.6% in 2024, slower than the 5.2% rate recorded in 2023.

“Our forecast takes into account continued housing weakness and modest macro policy support. Deflation remains a risk if consumption remains weak and the government responds by boosting more manufacturing investment,” Louis wrote Kuijs, chief economist for Asia Pacific at S&P Global Ratings, in a client statement. note.

Former HKEX CEO Nicolas Aguzin told CNBC in March that lack of trust in China, high interest rates and geopolitics were all impacting valuations and reducing the number of new stock listings .

India: an investor favorite

Indian stocks rallied amid general optimism about the country’s growth. The reference of the country Nifty 50 Index has increased for eight consecutive years, recording gains of 20% in 2023.

A study by HSBC also showed that the Indian National Stock Exchange has overtaken the Shanghai Stock Exchange to become the second largest stock exchange in the world in terms of monthly trading volume. But it still lags behind the Shenzhen Stock Exchange, which took first place.

Indian stock exchanges also saw the highest number of IPOs in 2023, according to a study by EY India. And this despite a gloomy environment for IPOs, particularly in Asia. India saw 220 IPOs last year, generating $6.9 billion in revenue, according to EY. This represents a 48% increase in transaction activity compared to 2022.

“While the Chinese market has slowed significantly, India has emerged as a standout player,” said George Chan, EY global IPO leader, in a separate research report.

Deals in India accounted for just 6% of global IPOs in 2019, but Chan said the country now accounted for 27% in the first quarter, “propulsing it to the position of the world’s leading IPO market in terms of transaction volume”.

In contrast, EY data shows that there were 30 IPOs in China’s A-share market in the first quarter, raising $3.4 billion. This is the smallest number of IPOs and smallest proceeds since 2020. Hong Kong had only 10 IPOs during the three-month period and only two exceeded $100 million in transaction terms, for the lowest product since 2010.


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