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India surpasses Hong Kong to become world's fourth-largest stock market for first time

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India's stock market capitalization has surpassed Hong Kong's for the first time, making the South Asian nation the fourth-largest equity market globally.

India’s growth: As of Monday’s close, India's stock market capitalization reached $4.33 trillion compared to Hong Kong's $4.29 trillion, reported Bloomberg. The surge in Indian equities is attributed to a growing retail investor base, strong corporate earnings and the country positioning itself as an alternative to China. India's stability, consumption-driven economy and demographic advantages make it an attractive investment destination.

China’s challenges: China, facing challenges like anti-COVID-19 measures, regulatory crackdowns, a property-sector crisis and geopolitical tensions, has seen a historic slump in its stock market. Foreign investors are reportedly redirecting funds from China to India, with global pension and sovereign wealth managers favoring the South Asian nation.

Significant decline: Chinese and Hong Kong equities have been experiencing significant decline, with their total market value dropping by over $6 trillion since 2021 peaks. Hong Kong has lost its status as a top venue for initial public offerings due to a lack of new listings.

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“The best long-term investment”: Although UBS Group AG anticipates a turnaround in 2024, momentum currently favors India as over $21 billion in foreign funds flowed into Indian shares in 2023, contributing to the country’s eighth consecutive year of gains for the benchmark S&P BSE Sensex Index. According to Goldman Sachs strategists, “there is a clear consensus that India is the best long-term investment opportunity.”

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