Is India’s Growth Story Attracting Global Investors?

Emerging economies

Emerging economies play an important role in global economic growth. Global growth has been improving gradually since 2H16, with the improvements in various fundamental factors of emerging economies also supporting their economic growth.

Is India’s Growth Story Attracting Global Investors?

The iShares MSCI Emerging Markets ETF (EEM), which tracks the performance of the emerging markets (VWO), has risen 20.7% over the past year. The iShares MSCI ACWI ETF (ACWI), which tracks the performance of the global markets, has risen 11.7% in the past year. Major emerging economies such as China, India, Russia, Brazil, and Mexico are adding more value to global economic growth.

India’s economic growth

India’s economy grew at an annual rate of 7.2% in 4Q17, much higher than its 6.5% growth rate in 3Q17. Its overall economic growth in 2H17 vastly improved compared to 1H17.

Indian citizens voted for the National Democratic Alliance, led by the Bharatiya Janata Party (or BJP), in the 2014 general election. After seeing no drastic change in the Indian economy in the past ten years, Indian citizens voted for the BJP to see some reform.

We’ve already seen some of the reforms pursued by Prime Minister Narendra Modi to strengthen India’s economic activity in recent years. However, market participants expect even more reforms to stimulate economic activity in the country at a faster rate.

Many fundamental factors are also improving in the Indian economy. Consumption patterns are changing. According to Future Group’s CEO, “Indians are learning to consume more and more.” Consumption could be an important growth driver for India. The iShares MSCI India ETF (INDA) has risen 6.6% in the past year.

In the next part of this series, we’ll analyze the performance of the NIFTY 50 Index.