India overtakes China as most attractive emerging market for investments

New Delhi: India has overtaken China as the most attractive emerging market for investing, according to 85 sovereign wealth funds and 57 central banks representing $21 trillion in assets.

India is increasingly viewed positively for its improved business and political stability, favourable demographics, regulatory initiatives, and a friendly environment for sovereign investors, according to a report by global investment management firm Invesco.

The report titled ‘Invesco Global Sovereign Asset Management Study’ included views from 142 chief investment officers, heads of asset classes along with senior portfolio strategists from 85 sovereign wealth funds and 57 central banks. Amid persistent high inflation and real interest rates, investors are recalibrating portfolios.

Sovereign wealth funds, it said, favour fixed income and private debt, while Emerging Markets (EMs) with solid demographics, political stability, and proactive regulation, particularly India, have emerged as prime investment destinations.

“Among the Emerging Markets, India has piqued sovereign investors’ interest, overtaking China,” it said. India, it said, exemplifies the attributes sought by sovereign investors. “India has now overtaken China as the most attractive Emerging Market for investing in Emerging Market debt.” A development sovereign fund based in the Middle East noted, “We don’t have enough exposure to India or China. However, India is a better story now in terms of business and political stability. Demographics are growing fast, and they also have interesting companies, good regulation initiatives, and a very friendly environment for sovereign investors.”

India is among a number of countries that are benefitting from increased foreign corporate investment aimed at both domestic and international demand through ‘friend-shoring’ and ‘near-shoring’.