Why does a China market rally benefit India in the medium term? Adrian Mowat explains

economictimes.indiatimes.com:

Adrian Mowat, EM-Equity Strategist, says initially China market rally will lead to outflows from India, but in the medium term, this will be very positive for inflows into emerging market equities by global investors and India ranked first equal as the largest market will benefit from that.

It is very difficult to encourage people to buy emerging market ETFs if China is doing poorly, which has been very much the case for the last couple of years. India just got slightly bigger than China, but China and India are two biggest markets in EM and they are both looking very interesting.
In terms of the booster shot that we have seen from China, do you believe they are just kicking the can down the road with these stimulus measures and they do need to be supplemented by further course of action?
Adrian Mowat: The message is that they will do whatever it takes. So, it feels a bit like listening to Mario Draghi in the years or so after the Global Financial Crisis. They have come through with significant and comprehensive measures that address some of the issues within the China economy. They are not going to solve things overnight. But us as financial market investors need to think about the implications for us. The implications are that the policymakers are really concerned and they are doing as much as they can. They are pushing down interest rates and they are trying to inflate the price of financial assets.

Remember that China has some balance sheet recession characteristics. Those sectors with high levels of debt, the