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Investors Eye India as Stock Market Hits Trillion-Dollar Milestone

Daniel Kim Views  

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As the Indian stock market continues to perform strongly and reach the fifth largest market in the world, investors are turning their attention towards India. However, very few exchange-traded funds (ETFs) are available for investment. Asset management companies are quickly preparing to launch new products, recognizing India’s high demand for investment opportunities.

According to the fund evaluation company FnGuide on the 20th, the recent three-month average return rate (as of the 19th) of 32 domestic Indian equity funds was 14.29%, ranking the top among equity funds in major countries. During the same period, it has outperformed the returns of U.S. funds (12.55%), Chinese funds (3.40%), and Vietnamese funds (2.10%). As the Indian stock market shows strong performance, the fund’s return rate continues to soar.

According to major foreign media, the total market capitalization of companies listed on the Indian stock market recorded a record high of 5.11 trillion dollars (as of the 14th). After surpassing 4 trillion dollars last December, it has grown by 1 trillion dollars in just six months. It is the fifth-largest after the U.S., China, Japan, and Hong Kong stock markets. The general investment sentiment is reviving as Indian Prime Minister Narendra Modi succeeded in forming a coalition government and emphasized the continuity of policies such as reform advancement.

As the Indian stock market booms, domestic investors are showing greater interest. According to the Korea Exchange, individual investors have net purchased KODEX India Nifty50 and TIGER India Nifty50 over the past three months for 54.9 billion won ($39 million) and 48.6 billion won ($35 million), respectively.

Although interest in the Indian stock market is high, the investment options are not diverse. Only seven India-related ETFs are listed on the domestic KOSPI market, and no Exchange Traded Notes (ETNs) exist.

Most of these ETFs (five) follow the representative Nifty50 index, with only two thematic ETFs. The index followers include KODEX India Nifty50 and TIGER India Nifty50, and the thematic ETFs are KODEX India Tata Group and TIGER India Billion Consumer, which were listed last May. Although direct investment is restricted and only indirect investment through funds is possible, the investment pool is exceptionally narrow.

This is due to the low product demand, as the interest in the Indian stock market has been overshadowed by the U.S. and China. However, as the Chinese stock market entered a bear market last year, India began to be recognized as the Next China, causing asset managers to prepare investment products.

Korea Investment Trust Management plans to launch ACE India Consumer Power Active in the second half of this year. It is a product that invests in consumer industries such as electronics, automobiles, and healthcare among the Nifty500 constituents. This is the first India-related ETF introduced by Korea Investment Trust Management.

Kiwoom Asset Management also plans to launch an India-related ETF in the second half of this year. This is the first new product in 10 years since KOSEF India Nifty (Synthetic) was introduced in 2014.

A company official said, “The Indian stock market is performing very well this year, and investors’ interest has increased significantly. There is a high need for India-related products.” He added, “There are already several index thematic ETFs, so we are considering other products.”

Daniel Kim
content@viewusglobal.com

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