British retail investors are increasingly betting on India, new data shows, with net flows for stocks and funds in the world’s most populous country growing 26-fold.
According to data from Interactive Investor, India is by far the most popular emerging market for British retail investors, beating out China.
Over the last two years, India-focussed stocks and funds have seen net inflows during 22 of the 24 months. That’s in stark contrast to China, which has seen only five months of inflows.
Trading volumes in India also rocketed, up 2200% over the past year. That compares to a sharp decrease in volumes of trading in Chinese stocks and funds.
Investments in India hit a record high in February, and came close to breaking that record last month. That April flurry in activity came as the 1.4-billion-strong country started its election, which includes multiple phases and goes on until June.
Myron Jobson, senior personal finance analyst at Interactive Investor, says: “When it comes to investing in emerging markets, for private investors, it is a two-horse race between India and China. The others don’t come close. But India has emerged as the frontrunner in recent history, with net flows into India-centric investments far outstripping the figure for China-centric investments.
“Net flows into Indian investments from customers on interactive investor reached an all-time high in February this year and came close to that peak again in April. In contrast, the heyday for Chinese investments when it comes to net flows was in January 2023. These investments have since experienced net outflows every month since then, except for November 2023.
“It is safe to say that shifting sentiment to both regions have pushed the pendulum in favour of one or the other over the years. In recent times, India has won the popularity contest among our customer base.”
The largest businesses in India include mega-conglomerates Tata and Adani, and tech outsourcer Infosys, which was founded by Rishi Sunak’s father-in-law N. R. Narayana Murthy.
Alex Watts, Fund Analyst, interactive investor, says: “India and China have experienced opposite fortunes over the past two years from an investment point of view. Over the recent years Indian equities have been one of emerging markets' strongest performers and is tipped to achieve real GDP growth of 6.8% in 2024 according to the IMF's most recent projections and is tipped become the third-largest economy by 2028, overtaking both Japan and Germany.
“India has cemented its status as one of the largest and fastest growing economies in the world, bolstered by a suite of business-friendly reforms enacted by President Narendra Modi from an investment standpoint.”
