India overtakes Taiwan as Sensex jumps 11%, now 2nd in EM weight index

A sharp rebound in Indian stocks this quarter has seen their weighting rise to the second spot in the MSCI Emerging Markets (EM) Index, trailing only to China’s.
 

With 108 members, India’s country weight stands at 14.483 per cent as of end-August, according to data compiled by Bloomberg. That’s a whisker above 14.480 per cent for Taiwan, which has 84 companies in the MSCI EM gauge, including the most-weighted Taiwan Semiconductor Manufacturing Co.
 

China continues to dominate with about a third of the index weighting. 
 

India’s S&P BSE Sensex has jumped 11 per cent this quarter, the world’s best performance among national benchmarks in countries with a stock market value of at least $1 trillion, data compiled by Bloomberg show.

Driven by a pandemic-fueled retail investing boom, Indian stocks were the world’s best performers between early 2020 and October 2021. Thereafter, rising concerns about aggressive rate hikes by the Federal Reserve caused foreign investors to withdraw a record $33 billion from local shares in the nine months through June.
 

Overseas funds have returned strongly this quarter, pumping $7.6 billion and supercharging the market. The Sensex is now less than 5 per cent away from an all-time high reached in October.
 

There has been a big variance in China and India weightings in the EM gauge over the past two years as their market performance diverged — with a regulatory crackdown and stringent Covid-19 curbs causing investors to flee Chinese stocks.
 

While China’s weighting has fallen 9 percentage points since Aug. 2020, India’s has jumped more than 6 points, the data show.

 “Economic impact of China’s lockdown and the zero-Covid policy is being seen now, while India is emerging stronger, month-by-month,” said Rakhi Prasad, an investment manager at Alder Capital.“India’s weight in the emerging markets can be higher, but how much it goes from here will depend on its economy’s performance.”