Taiwan and India gaining ground in emerging markets equity portfolios, threatening China
From Taipei Times: 2024-07-14 12:00:00
Taiwan and India are emerging as top contenders to replace China in emerging market equity portfolios, with each commanding more than 19 percent weightings in the MSCI EM Index. Investors are diversifying into these markets for opportunities in AI chipmakers and infrastructure development under PM Modi’s programs. China’s once-dominant position has shrunk to 22.8 percent.
As the US rate cycle peaks out, investors are increasingly looking for alternatives to China in emerging markets to manage risks. Taiwan’s semiconductor industry and India’s tech sector make them attractive options for diversification. China’s regulatory crackdowns and deleveraging have led to trillions of dollars in losses for money managers.
Taiwan and India may surpass China in the MSCI EM Index this year, marking a shift towards a multipolar emerging markets world. Taiwan’s market cap is less than a third of China’s, yet its TAIEX has surged 33 percent this year fueled by companies like Taiwan Semiconductor Manufacturing Co. India’s NIFTY 50 Index has also risen more than 12 percent under Modi’s promising policies.
Earnings play a crucial role in the allocation preferences of investors. While China’s earnings estimates have barely changed, Taiwan and India have seen at least a 13 percent increase in their forward earnings estimates. Despite higher valuations for Taiwan and India, money continues to flow into these markets, with emerging Asia ex-China receiving about US$9 billion in net inflows recently.
Read more at Taipei Times: Taiwan, India threaten China’s top spot in emerging markets equity portfolios