China worse than India on regulatory woes, state-owned enterprise skew

Domestic markets up 22% this year, MSCI China down 12%

The Indian market has sharply outperformed its emerging market (EM) counterpart China, prompting several foreign funds to rethink their asset allocation strategies. On a one-year and year-to-date basis, the MSCI India index is up 52 per cent and 27 per cent, respectively. In comparison, the MSCI China index is down 7 per cent over a one-year period and 13 per cent year-to-date.

China’s underperformance comes amid Beijing’s crackdown against its internet companies, many of whom dominate its benchmark indices given their size and scale. The regulatory tightening by Chinese authorities has led to exodus of foreign funds from China's market,