Almost half of wealth and pension fund managers agree
A new study by London-based think-tank Official Monetary and Financial Institutions Forum has found that wealth and pension funds are increasingly favoring India over China. The survey, which involved 100 funds managing a total of $26 trillion in assets, including Canada’s Caisse de Depot et Placement du Quebec, found that nearly 40% of investors consider India the most attractive emerging market.
In contrast, less than a quarter of respondents selected China, underlining a more cautious approach to investments in the region.
Factors contributing to India's appeal include its robust growth, favorable demographics, and efforts to diversify global supply chains. The authors of the report cited India's increasing openness to foreign investors, noting its scheduled addition to JPMorgan’s bond index in June.
“In contrast, there is hesitation on China. No surveyed fund has a positive outlook for its economy or expects higher relative returns from Chinese assets,” the report states. Respondents note regulation and geopolitics as barriers to investing in China, with many investing in Chinese assets primarily because they are part of benchmark gauges.
The demand for Chinese assets has experienced a decline in recent years, with foreign direct investment turning negative in the third quarter of the year. This trend is driven by growing concerns over China's economic recovery, rising tensions with the West, policy challenges following the pandemic, all on top of a weakened economy.
