MSCI move on China, India stocks reshapes investment landscape

MSCI (Morgan Stanley Capital International), a leading global index provider, has decided to slash dozens of Chinese companies from its global benchmarks. This decision comes on the heels of the turmoil in China’s stock market, which witnessed trillions of dollars in value wiped out.

Simultaneously, MSCI has elevated India’s weightage in its Global Standard (Emerging Markets) index to a historic high of 18.2%, marking a pivotal moment in the global investment landscape.

MSCI’s decision on India underscores the country’s robust economic performance and strategic policy decisions.

In its February review, MSCI added five Indian stocks to its Global Standard index without any deletions.

This move reflects confidence in India’s market resilience and its potential as an attractive investment destination. Notably, the country’s weightage in the index has nearly doubled since November 2020, positioning it as the second-largest constituent after China.

Factors driving India’s rise

Several factors contribute to India’s ascending prominence in MSCI’s Global Standard index.

Primarily, it’s the standardized foreign ownership limit (FOL), implemented in 2020, which has enhanced transparency and accessibility for global investors.

In addition, the sustained rally in domestic equities has bolstered India’s appeal, showcasing the country’s economic resilience amid global uncertainties.

Relative underperformance of other emerging markets, particularly China, has further tilted the scales in favor of India.

Conversely, the exclusion of 66 Chinese stocks from MSCI’s global benchmarks reflects the challenges facing China’s market. The ongoing concerns about China’s struggling property sector and weak consumption have dampened investor