India has surpassed China and is now only behind France as the sixth-largest market in the MSCI All Country World Investable Market Index (ACWI IMI). India has emerged as the largest emerging market (EM) in the global capital markets performance indicator for the first time. India weighed 2.35 percent at the end of August, 11 basis points more than China (2.24 percent) in the MSCI ACWI IMI. Just 3 basis points separate France and India in terms of weight.
The MSCI ACWI IMI index, which is monitored by exchange-traded funds (ETFs) with relatively modest assets of less than $2 billion, may not be greatly impacted by India’s top weighting in terms of passive inflows. Nonetheless, achieving the top EM and sixth-largest weightage tag in the index is anticipated to significantly improve the nation’s profile and appeal as an investment destination.
Since its peak in early 2021, China’s weight has decreased by half, while India’s has more than doubled. At now, India’s nominal GDP growth rate is around three times higher than China’s, hovering in the low teens. Because of this, the operational and earnings growth environments for businesses in the two regions are becoming increasingly different.
India also surpassed China in August to take the top spot in the MSCI EM IMI for the first time. The weight of all domestic stocks in the MSCI EM IMI index is 22.27 percent, compared to over 70 basis points less for India’s larger neighbor, which is 21.58 percent.