look news india
Ahmedabad : China, once the darling of the emerging markets, is now deviating from the emerging markets basket due to chronic low yields, uncertain economic environment and geopolitical tensions. Assets of popular emerging markets-focused exchange-traded funds (ETFs, excluding China) rose to $11 billion this month, from less than $500 million three years ago. Thus it has increased 22 times.
Market analysts say a large number of silent investors, especially from the US and European regions, are increasing their stake in ETFs that do not include China. India will benefit the most from this trend as it has a higher weighting than China in the Emerging Markets Index.
Mainland companies have the largest weighting in the regular MSCI Emerging Markets index, with 22.07 percent. In indices without China, these weights are redistributed to other countries. Due to this, the weight of India and Taiwan has increased by more than 4.95 percent and the weight of South Korea has increased by 4.16 percent.
Due to the weak performance of Chinese markets, the MSCI Emerging Markets ex-China Index outperformed the MSCI Emerging Markets and MSCI Asia ex-Japan indexes. Has performed better in the last three years. Despite a recent rally of 12 percent, the Chinese stock index is still down 10 percent and 29 percent over one-year and three-year periods, respectively.
China's CSI 300 index is trading at a trailing 12-month PE multiple of 11t. If we compare, the Indian market is at 20x PE multiple and Taiwan is at 17.4x PE multiple. Both have major weightings in the ex-China index.