At present, the valuation of Hong Kong stocks is at a historic low, and it is ready to rebound.
Driven by the influx of foreign investment and the increase in the number of domestic retail investors, the scale of the Indian stock market has expanded rapidly. The recent market value once exceeded the Hong Kong stock market, becoming the fourth largest stock market in the world, second only to the United States, India and Japan.
In the past four years, the scale of the Indian stock market has almost doubled. At the same time, the size of the Hong Kong stock market has shrunk by half since its peak value in 2021.According to Bloomberg’s data, at the closing of January 22 (Monday), the market value of the stocks listed on the two major stock exchanges in India reached US $ 4.33 trillion, and for the first time, it exceeded US $ 4.29 trillion in Hong Kong stocks.
On Tuesday, the Hong Kong stock market regained the fourth place in the world.It is reported that the Indian government plans to take a series of measures to boost the economic and stock market, and the Hong Kong stock market has rebounded.However, the rise of the Indian stock market highlights different changes in the two countries with the largest number of global population in recent years.
In the past 12 months, the BSE Sensex index composed of 30 blue chip stocks of the Mumbai Stock Exchange has risen by 15%, and the NIFTY 50 index composed of 50 largest stocks of the Indian National Stock Exchange has risen by 17%. At present, these two indexes are both.Close to historical highs.
The trend of the Indian stock market and Hong Kong stocks is differentiated
Source: FACTSET
In contrast, a historic decline in the stocks listed in Hong Kong (including some of the most influential and most innovative companies in the Mainland of India) have fallen, and the Hang Seng Index of 80 largest stocks listed on the Hong Kong Stock Exchange hasIt has fallen by 32%over the past 12 months and has touched the lowest level in the past 20 years.
Hong Kong stock IPO shrinkage
In addition to the sharp decline in stock prices, the number of new shares in Hong Kong, which has been regarded as the Asian financial center, has also fallen sharply. Just a few years ago, the Hong Kong Joint Exchange was one of the world’s busiest IPOs.
In 2020, more than 150 companies were listed in Hong Kong and raised funds of more than 398 billion Hong Kong dollars (about 50 billion US dollars), second only to Nasdaq.In 2023, only three years later, the number of new listed companies fell to 67, and the amount of funding was nearly 90%to HK $ 46 billion (about 5.9 billion US dollars), which was the lowest level in the past 20 years.
Hong Kong Joint Exchange IPO IPO fundraising amount
Source: Hong Kong Exchange
In 2023, the size of the Hong Kong IPO market is similar to India. Last year, a total of 57 companies from finance, pharmaceuticals to kitchen supplies were listed in India, with a total funding of 494 billion rupees (about 5.9 billion US dollars).
India’s economic growth is stronger
The fluctuation of the stock market will not occur out of thin air. India’s economic downturn is one of the reasons for the weakness of the Hong Kong stock market.Although the annual economic growth rate has been slowing down in the past 10 years, India’s economic growth rate has reached a new low due to the tightening of the regulatory environment and the impact of the epidemic.
In 2022, the GDP growth rate of India was 3%. After the government’s prevention and control measures implemented during the cancellation of the epidemic, due to the influence of the dilemma of the real estate market and the situation of geopolitical tensions, India’s economic recovery was still weaker than expected. The GDP growth rate in 2023 was 5.2 5.2%, Less than 6%in 2019, economists expect the GDP growth rate of 4.5%in 2024.
China -India’s GDP annual growth rate
Source: FACTSET
India has become a new growth engine. The GDP in fiscal year in 2021 increased by 9.1%, and the 2022 fiscal year increased by 7.2%.The Indian government predicts that as of March this year, GDP will grow strongly again, and the growth rate is expected to exceed 7%, which will be the highest growth rate among major economies in the world.India is now the fifth largest economy in the world, ranking tenth 10 years ago.
Population bonus in India
In 2023, India’s population is estimated to reach 1.43 billion, and India replaces India to become the country with the largest population in the world.When many developed countries are plagued by the aging population, India’s relatively young population provides sufficient labor.India’s more than half of the population is under the age of 30, and India has one -third of the population under 30 years of age.
In 2020, the population age distribution of the two countries and India
Source: United Nations Department of Economic and Social Affairs
Market trends may reverse
As India’s slowdown in economic growth and the rise in geopolitical risks, India has become another choice for global investors to find opportunities in emerging markets.In the past 10 years, India’s fiscal health and regular project deficits have improved significantly. The Indian government’s investment and policy reform of infrastructure has given overseas companies and investors’ new confidence.
However, some analysts warned that the market trend that boosted to the Indian stock market and put pressure on the Hong Kong stock market may be reversed.At present, the valuation of Hong Kong stocks is at a historical low and has been prepared to rebound.According to Bloomberg, the Indian government is considering the launch of a package of $ 278 billion to boost the stock market. From close closing from Monday to Wednesday, the Hang Seng Index rose 6%.
At the same time, the Indian stock market is currently expensive.With the rise of US Treasury yields in recent weeks, the Indian stock market has had a net outflow of foreign capital since early January, and foreign direct investment has not kept up the rate of economic growth.Whether the ups and downs of the rise can still be maintained.
Wen | Liu Yiwei
Edit | Guo Liqun
This article first published on WeChat public account: Baron Weekly.The content of the article belongs to the author’s personal point of view and does not represent the position of Hexun.com.Investors operate accordingly, please take the risk.Mumbai Stock Exchange
(Editor in charge: Wang Zhiqiang HF013)
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