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Red-hot Indian equities propel country past China weighting in MSCI All-Country index

India has overtaken China’s weighting in one of the world’s biggest stock market benchmarks, as share sales and rising liquidity in Indian companies make the country more open to investors.

India’s share of the free-float, “investable”, version of the MSCI All-Country World index, which tracks almost all global stocks that can be bought on the open market, rose to 2.33 per cent this month, eclipsing China’s 2.06 per cent.

The shift makes India the sixth-largest weighting in an index that is dominated by US companies. It also reflects demand in India’s red-hot stock market, which is also unlocking shares for global investors to buy just as the Chinese economy slumps and fund managers dump China-related stocks.

“It is a natural evolution of the market,” said Vivian Lin Thurston, a portfolio manager at William Blair Investment Management.

“You have Indian equities performing strongly and Chinese ones lagging. There is a rebalancing happening as MSCI adds and drops names, so some of the Indian stocks that have improved liquidity get a bit more weight in the system.”

India’s blue-chip Nifty 50 index has hit record highs this year as the country’s economy registers the strongest GDP growth of any major economy and millions of middle-class households pile their savings into local mutual funds. Some $38bn of domestic money has flowed into Indian equities this year, exceeding the annual level of each of the past 16 years.

Indian companies have rushed to take advantage of the country’s soaring stock markets, with Ola Electric and mortgage provider Bajaj Housing Finance among the biggest initial public offerings so far this year.

More than $38bn has been raised on its equity market this year, the highest in Asia and more than double the amount over the same period a year ago, Dealogic data shows.

Earlier this month the free float of Indian stocks also supplanted Chinese counterparts as the largest country in the MSCI Emerging Markets investable index, at 22 per cent to 19 per cent.

When not adjusted for free float, China remains ahead of India in the closely watched MSCI Emerging Markets index, which does not include small-cap companies. But China has seen its share fall from 40 per cent in 2020 to a quarter while India’s has risen to a fifth from below 7 per cent 10 years ago.

Even so, China and India, and emerging markets as a whole, are still overshadowed by the bull run in US stocks, which make up two-thirds of the world index. About $4.6tn in assets were benchmarked to MSCI’s All-Country World Investable Market index as of the start of 2024.

“This is very meaningful,” said Martin Frandsen, global equity portfolio manager at Principal Asset Management.

“In India we have seen and recognised the significant improvement from a value creation perspective, we see significant innovation as in China, a lot of opportunities . . . to invest in some great companies.”

Goldman Sachs analysts expect the Nifty 50 to advance 8 per cent and reach 27,500 by the end of September 2025. Those gains will be fuelled by corporate earnings growth in its mid-teens, according to the US bank.

However some analysts are cautioning over valuations in the Indian market. Goldman strategists said the 12-month forward price/earnings for the MSCI India index have hit a record high of 24.7 — making it the most expensive it has ever been.

Thurston warned that the positions of China and India could reverse again if the “depressed” valuations of Chinese companies recovered in the future.

Despite lofty equity valuations, Rajat Agarwal, Asia equity strategist at Société Générale, said flows into India would probably continue amid a more favourable outlook for emerging markets with the US Federal Reserve expected to cut interest rates on Wednesday.

“There is no one on the street not saying that valuations in India are not high,” Agarwal added. But domestic “money is coming in regardless . . . in the near term the flow situation is not going to reverse unless we see some kind of an external shock”.

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Global wind turbine order intake reached new highs in H1 2024, with 91.2 gigawatts (GW) of activity, a 23% increase year-over-year, thanks to the Asia-Pacific region.

Globally, investment by wind energy developers in H1 2024 totaled $42 billion, a 3% increase year-over-year, according to new analysis from Wood Mackenzie. Much of that activity occurred in Q2, which saw 66 GW of wind turbine order intake, due in large part to demand in China’s northern region.

In fact, the Asia-Pacific region accounted for a whopping 85% of global intake in the first half of 2024. China saw 70 GW of orders for its domestic market and captured 5 GW of wind turbine orders abroad. Developers in India made great strides in the first half as well, yielding a 69% increase year-over-year.

India’s Envision was the leader for overall order intake, followed by China’s Windey and Goldwind, all with more than 12 GW of activity.

However, Western wind turbine OEMs struggled due to intensifying competition over more modest demand and contributed just 13% of global order intake in H1. In total, order intake outside of China decreased 16% (-2.3 GW) in the first half. Intake in the Americas and Europe dropped 42% year-over-year, with less than 10 GW combined ordered in H1.

“Chinese OEMs continue to break records for order intake on activity both domestically and aboard,” said Luke Lewandowski, vice president, global renewables research at Wood Mackenzie.

“Conversely, western OEMs are struggling to keep pace, challenged by China’s competitive advantages in pricing and availability. Soft demand in Western markets as well as policy uncertainty, inflation, and other cost pressures have also driven down activity in the US and Europe. China remains the undisputed leader in the industry.”

While global onshore order activity increased in the first half, the offshore sector struggled, with order intake decreasing 38% year-over-year through the first half (-4.1 GW) as challenging project economics have curbed the market.

“The offshore market has almost 30 GW of conditional orders globally, 21 GW of which are for projects in Europe and the US, but challenging economics continue to delay conversion into firm orders,” said Lewandowski.

Even with the new 100% tariff on electric vehicles imported from China, BYD would still have the cheapest EV in the US. According to a new report, BYD’s lowest-priced EV would still undercut all US automakers at under $25,000.

After discontinuing the production of vehicles powered entirely by internal combustion engines in March 2022, BYD has been at the forefront of the industry’s shift to EVs.

However, BYD has been building its supply chain for much longer. The company began building lithium-ion batteries in 1996. BYD’s batteries powered Motorola and Nokia’s popular smartphones in the early 2000s.

Its early ventures into the battery industry helped BYD become the industry juggernaut it’s known as today.

Since releasing its breakthrough Blade EV battery in 2020, BYD has continued introducing more efficient, lower-cost tech to drive down prices.

BYD’s cheapest electric car, the Seagull EV, starts at under $10,000 (69,800 yuan) in China. Its affordable electric and hybrid models are squeezing gas-powered vehicles out of China’s auto market, especially from foreign automakers.

BYD has no plans to enter the US passenger vehicle market (it already sells electric buses), the company’s North American CEO Stella Li said. If it did, it could hold an advantage over US automakers.

According to AutoForecast Solutions CEO Joe McCabe (via Nikkei), BYD would still have the cheapest EV in the US, even with the new 100% tariff on Chinese electric vehicle imports.

The tariff will take effect on September 27 and is intended to “protect American manufacturers from China’s unfair trade practices,” according to a press release from The White House.

McCabe said BYD’s lowest-priced EV for the US would be $12,000. Even with a 100% tariff rate, BYD would have the cheapest EV in the US at under $25,000.

Tesla, which still holds a commanding lead (48% share in July) in the US EV market, has yet to break the $30,000 threshold.

Chinese automakers, like BYD, have an advantage with established supply chains, enabling lower prices.

Electric vehicles accounted for over 50% of passenger vehicle sales in China in July. In the US, EVs accounted for 8.5% of the light vehicle market during the same period, according to the latest S&P Global Mobility figures.

Chinese companies, including BYD and CATL, also dominate the global battery market. According to SNE Research, CATL (35.9%) and BYD (16.5%) led global EV sales in the second quarter based on shipment.

Through the first eight months of 2024, CATL accounted for 37.6% of the global EV battery market, while BYD took second with 16.1%.

Electrek’s Take

BYD is not planning to launch passenger EVs in the US, at least not in the near term. However, McCabe’s comments should spark concern among some US rivals.

As BYD continues launching lower-priced EVs with more range and advanced features, several US automakers continue delaying significant projects.

Ford canceled its three-row electric SUV, opening the door for overseas rivals like Kia and Hyundai to take advantage. GM is also pushing back its battery factory in Indiana and could turn to CATL for LFP batteries in the US, like Ford and Tesla.

Microsoft and BlackRock said Tuesday they are planning a $30 billion fund to develop data centers and power plants to power artificial intelligence. The fund would be one of the largest of its kind, though it isn’t clear how much Microsoft is contributing and shows how the company is enlisting another longtime real estate and data center investor, BlackRock, rather than go it alone as AI costs stack up.

Abu Dhabi-based investment firm MGX will also invest in the fund, and Nvidia will consult on the design of data centers built by the fund or the companies it backs, Microsoft and BlackRock said. (MGX has also been in talks to participate in OpenAI’s capital raise of up to $7 billion.)

The new fund, dubbed the Global AI Infrastructure Investment Partnership, will ultimately look to raise as much as $100 billion, including debt financing, and will “chiefly” invest in infrastructure located within the U.S., the companies said. The data centers will be “non-exclusive” and serve “a diverse range” of customers, the companies said.

The fund is the latest sign of Microsoft’s interest in new data centers and power sources needed to train and run large-scale AI models, such as those developed by OpenAI. Microsoft has already projected that it will spend more than $50 billion this year on capital expenditures, primarily for building data centers, and has discussed building a supercomputing data-center server cluster for OpenAI that could cost more than $100 billion. Numerous large AI data centers are under way in the continental U.S., according to the AI Data Center Database.

The French luxury group has acquired the location of its fashion, watches and fine jewelry boutique.

PARIS – Chanel said Wednesday it has bought the building housing its boutique on Avenue Montaigne for an undisclosed sum, as leading luxury brands continue to snap up real estate in a bid to secure prime locations for their brands.

The building at 42 Avenue Montaigne is home to a fashion, watches and fine jewelry boutique and offices, the French luxury brand said in a statement. Chanel has been in the building since 1983.

It was the target of a high-profile smash-and-grab robbery in June, during which robbers rammed the windows of the boutique with a vehicle.

The 6,500-square-foot Chanel store covers two floors and is designed to accommodate VIP clients with private salons located on the first floor. The building spans seven floors and three basement levels.

A protected property, it was built in 1965 by architects Roger Anger, Mario Heymann and Pierre Puccinelli, known for their creative approach using geometric plays, in this case a pleated bay window layout.

Announcing annual results in May, Chanel said it planned to ramp up capital expenditures by at least 50 percent this year from a record $1.23 billion in 2023.

“We will be really on the offensive in terms of possible real estate acquisitions, but we will do them at the right time at the right price,” chief financial officer Philippe Blondiaux told WWD at the time.

Chanel has doubled the size of its distribution network in the last five years. In 2024, it increased its network to 612 locations, with 47 net openings.

“The acquisition of 42 Avenue Montaigne follows other real estate purchases in 2023 in Paris and across other cities including London and Biarritz, important in Chanel’s history and heritage,” the brand said on Wednesday.

The battle for real estate in Paris has been compared to a game of Monopoly, with Avenue Montaigne one of its most prized locations.

Among others, LVMH Moët Hennessy Louis Vuitton in 2022 acquired the building housing its headquarters at number 22, while rival group Kering has bought the former home of the Canadian embassy across the street at number 35.