Which
economic
giant
should
emerging
markets
investors
go
for:
China
or
India?
Chinese
stocks
have
done
poorly
this
year.
Hong
Kong’s
Hang
Seng
index
has
plummeted
around
12%
in
the
year
to
date,
while
the
Shenzhen
Component
is
down
over
9%.
A
real
estate
crisis
continues
to
afflict
the
country.
India’s
Nifty
50,
on
the
other
hand,
is
up
6.8%
this
year
so
far.
CNBC
Pro
spoke
to
experts
to
ask
which
is
the
better
market
to
invest
in
—
beyond
recent
market
moves
—
and
found
that
they
were
overwhelmingly
in
favor
of
India.
Here
are
the
reasons
and
stock
picks
they
gave.
Why
India
instead
of
China?
India
is
the
“best
structural
growth
opportunity”
in
emerging
markets,
according
to
Malcolm
Dorson,
head
of
emerging
markets
strategy
at
Global
X
ETFs.
“Not
only
does
it
boast
the
largest
population
in
the
world
(offering
a
strong
demographic
dividend),
but
this
is
the
largest
democracy
in
the
world,”
he
said.
In
a
Nov.
5
note,
Morgan
Stanley
wrote
that
“India
offers
the
best
domestic
demand
alpha
opportunity
within
Asia
and
one
of
the
best
structural
stories
over
the
medium
term
globally.”
China
still
boasts
a
strong
structural
story
—
especially
in
consumption
—
but
the
Chinese
Communist
Party
leadership’s
“unpredictable”
decisions
have
hurt
market
confidence,
Dorson
said.
Quincy
Krosby,
chief
global
strategist
for
LPL
Financial,
added,
“The
situation
in
China
has
been
exacerbated
by
the
deteriorating
property
market,
which
was
built
on
debt
and
which
constituted
approximately
25%
of
China’s
overall
economy.”
In
addition,
though
Beijing
has
been
trying
to
boost
the
economy
through
targeted
monetary
stimulus,
the
sluggish
economy
appears
to
require
“broader
and
more
viable”
stimulus,
Krosby
said.
“The
popularity
of
India
as
a
market
has
been
highlighted
as
an
antidote
to
the
tightly
controlled
Chinese
economy,”
he
said.
LPL
Financial’s
chief
technical
strategist,
Adam
Turnquist,
added
that
India
has
emerged
as
an
increasingly
attractive
alternative
to
China.
He
added
that
the
key
reasons
India
has
performed
better
than
China
are
its
significant
infrastructure
spending;
its
growing
population
and
robust,
young
workforce;
and
the
manufacturing
shift
away
from
China.
“While
we
may
not
go
as
far
as
officially
calling
India
the
new
China,
the
economic
and
technical
trends
suggest
the
country
may
be
set
for
a
prolonged
period
of
outperformance,”
he
said.
China’s
economy
is
more
than
five
times
larger
than
India’s,
but
China’s
long-term
growth
potential
has
been
fading
for
some
time,
said
Alejandra
Grindal,
chief
global
economist
at
Ned
Davis
Research.
“Its
demographic
outlook
is
fading,
while
productivity
will
be
held
down
by
numerous
factors,
including
high
debt
and
deglobalization,”
she
said.
India,
on
the
other
hand,
has
“ample
room
for
economic
catch-up.”
Rahul
Sen
Sharma,
president
and
co-CEO
of
Indxx,
pointed
to
India’s
changing
demographic
—
its
middle
class
is
growing,
and
rising
demand
and
consumption
are
fueling
the
country’s
robust
growth.
Where
and
how
to
invest
in
India
Investors
could
go
for
the
“booming
areas”
in
India
—
renewables
such
as
hydrogen
and
solar
energy,
as
well
as
agricultural
tech,
according
to
Sharma.
“The
ambitious
renewable
energy
targets
set
by
India
…
offer
a
favourable
climate
for
investors,”
he
wrote.
Solar
energy
investments,
in
particular,
are
“very
profitable,”
thanks
to
abundant
sunlight
in
the
country
throughout
the
year,
government
incentives
and
falling
equipment
costs,
he
said.
Dorson
of
Global
X
ETFs
said
he’s
favoring
consumer
names
that
should
benefit
from
stimulus
ahead
of
the
next
election.
He
likes
“high
quality”
staples
such
as
Hindustan
Unilever
and
Nestle
India
,
which
he
expects
will
benefit
from
improving
income
levels
and
more
education.
To
tap
the
trend
of
higher-end
consumption,
Dorson
likes
jewelry
company
Titan
Jewelry.
Similarly,
LPL
Financial’s
Krosby
has
a
preference
for
the
consumer
segment.
“India
enjoys
a
growing
middle
class
and
companies
that
focus
on
the
broad
set
of
consumer
discretionary
spending
are
interesting
to
investors.
Similarly,
smaller
companies
that
provide
health-related and
a
broad
range
of consumer
staples
are
also
a
target
for
investors,”
he
said.
On
the
whole,
however,
India
is
a
difficult
market
to
access,
and
most
retail
investors
would
buy
such
stocks
through
exchange-traded
funds,
according
to
the
experts.
But
both
Krosby
and
Dorson
would
advocate
active
management
in
emerging
markets
such
as
India,
given
political
and
economic
complexities,
among
other
reasons.
Dorson
likes
the
structure
of
active
ETFs.
“[It
offers]
the
cost,
liquidity,
and
transparency
of
an
ETF
with
the
thoughtful
process,
on-the-ground
research,
and
risk
management
of
an
active
fund,”
he
said.
His
firm
offers
one
such
ETF,
the
Global
X
India
Active
ETF.
Here
are
10
top-rated
India-focused
funds
accessible
to
international
investors,
according
to
Morningstar.
