Can a gloomy Chinese market outlook spur foreign investor interest in India? Experts weigh in
emerging markets (EMs), including India, experts believe. The public debt of the world's second-largest economy has been mounting, its property market is in deep distress, its exports are slowing and it has to deal with geopolitical issues too. China's economic outlook is bleak.
Shanghai Composite Index is flat for the year and with the worsening economic situation, there is very little scope for its rise this year. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services pointed out that the Shanghai Composite Index is the worst-performing large market if we take the near-term and the long-term views. "The index is flat not only for the year but for the last 16-year period also.
Shanghai composite is now at 3,126, the same level as in March 2007. This is terrible long-term performance," said Vijayakumar. He said the disappointment with China is only increasing and this could perhaps be good for India.
Vijayakumar underscored that with a declining population, a decelerating economy, political tensions with the West and anti-business economic policies, the prospects of the Chinese market look dim. That’s why FPIs are following an ‘avoid China’ policy. "This is certainly good for India," said Vijayakumar.
"Increasing outflows from China and inflows into India are clear inevitable long-term trends. But in the short run, high valuations in India and rising bond yields in the US will pose challenges to this trend," said Vijayakumar. On similar lines, Manish Chowdhury, Head of Research at StoxBox underscored that the outlook for China is bleak as it is struggling on multiple fronts.
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