On Tuesday, September 17, India’s weight in the MSCI Investable Market Index (IMI) surpassed that of China for the first time, largely due to India’s stable economic growth and strong influx of funds.
According to a report by Morgan Stanley on Tuesday, India’s weight in the MSCI Investable Market Index (which includes large, mid, and small-cap stocks) has risen to 2.35%, exceeding China’s 2.24%.
MSCI, targeting global investors, typically selects the most representative stocks when making choices, with the weight of heavyweight stocks being higher.
According to Reuters, a team led by Morgan Stanley analyst Jonathan Garner pointed out, “Due to outstanding market performance, improved liquidity, and new share issuance, India’s weight will continue to rise.”
Morgan Stanley stated that India’s current GDP growth rate is around 13% or 14%, more than three times that of China, indicating a “significant difference in profit growth environment” between the two countries.
India’s weight has steadily increased from 9.2% in December 2020, while China’s weight has sharply declined from 39.1%.
This marks the first time India has become the largest emerging market (EM) in the MSCI Investable Market Index. In August, India’s weight in the MSCI Emerging Markets Index rose to 19.8% after adjustments, closing in on China’s 24.2%.
Earlier this month, Morgan Stanley predicted that with the Indian stock market rising “just over halfway,” India’s weight in the MSCI Emerging Markets Index would surpass that of China.
Analysts suggest that the increase in India’s weight in the MSCI index will bring additional fund inflows.
India is one of the best-performing markets globally this year, with its benchmark indices – the National Stock Exchange (NSE) Nifty 50 and the S&P BSE Sensex in Mumbai – rising by 17% and 15% respectively.
In contrast, China’s Shanghai Composite Index has fallen by about 9% this year due to concerns about the economy and the real estate industry.