February 23, 2024

Move over China! Japanese investors head to Dalal Street with big money

The total assets of India equity-focused investment trusts in Japan saw a 11%, or ¥237 billion ($1.6 billion), jump in January. Factoring in the gains of Indian stocks on the yen basis last month, the figures suggest inflows of about ¥140 billion into India equity funds, while Japanese stock funds had almost no net inflows, a Bloomberg report said. 

In contrast, flows into Chinese shares dropped the most among 14 emerging markets that are covered by Japan’s data on international investment positions. The figures include positions of institutional and retail investors.

“Indian stocks are attracting interest as a theme for economic growth, as the next China,” Daiju Aoki, regional chief investment officer at UBS SuMi Trust Wealth Management Co. in Tokyos was quoted in the report. “Client interest is more about India as a whole rather than individual companies.”

Holdings of India’s stocks rose more than those of any other developing economy last year, according to Bloomberg analysis of government data that factor in net purchases and asset prices. 

The shift in money from Japan, the world’s biggest creditor, comes as China grapples with the collapse of a property bubble and deflation — the economic malaise that Japan suffered for decades.

Economists forecast India’s year-on-year economic growth will average more than 6% at least until the second quarter of 2025, while China’s is expected to remain below 5% during this period.

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