India has become the 6th largest market in the Morgan Stanley Capital International (MSCI) All Country World Investable Market Index (ACWI IMI), surpassing China and just marginally behind France. The United States of America (USA) has topped in the index.
- As of 31st August 2024, India’s weight in the MSCI ACWI IMI stood at 2.35%, 11 basis points (bps) higher than China’s 2.24%. While, France MSCI AWI IMI is just 3 bps higher than India i.e. 2.38%.
For the 1st time, India has surpassed China to become the top Emerging Market(EM) in the MSCI EM Investable Market Index (EM IMI).
- The combined weight of India’s domestic stocks, as part of the MSCI EM IMI Index stood at 22.7% compared to 21.58% of China.
Points to Note:
i.MSCI ACWI IMI is a global equity index which monitors the capital performance across the world. It includes large- and mid-cap stocks and is more inclusive version of the broadly tracked MSCI ACWI index.
ii.Both MSCI ACWI IMI and MSCI EM IMI indexes are developed by the United States of America (USA)-based publicly-traded financial company, MSCI Inc.
Key Points:
i.Despite India’s significant growth, India still lags behind China in MSCI ACWI index with a weight of 2.07% compared to China’s 2.41% as of 16th September, 2024.
ii.As per Morgan Stanley Analysts, India’s top weight in the MSCI ACWI IMI is unlikely to boost passive inflows, as the index is tracked by Exchange-Traded Funds (ETFs) with moderate assets of less than USD 2 billion.
iii.According to Morgan Stanley research on 17th September 2024, China’s weight in the index has fallen by half a percentage point since peaking in early 2021, while, India’s has more than doubled during this period.
- It also noted that India’s nominal Gross Domestic Product (GDP) growth rate is currently, 3 times that of China which resulted in a significant difference in operating and earnings growth between the companies in the two countries.
iv.The United States of America (USA) has topped the MSCI ACWI IMI index with weight of 68.23%, followed by Japan (5.73%) and the United Kingdom (UK) (3.51%) secured 2nd and 3rd position in the index respectively.
- Other top 10 countries in the index: Canada (4th), Switzerland (7th), Taiwan (9th) and Germany (10th).
Top 5 Countries in MSCI ACWI IMI:
| Rank | Name of the Country | Weight in % |
|---|---|---|
| 1 | The United States of America (USA) | 63.23 |
| 2 | Japan | 5.73 |
| 3 | The United Kingdom (UK) | 3.51 |
| 4 | Canada | 2.83 |
| 5 | France | 2.38 |
| 6 | India | 2.35 |
India-Specific:
i.As per Morgan Stanley Analysts, India has showcased a substantially stronger performance in the equity market. This growth can be mainly attributed to the robust macroeconomic fundamentals of the Indian economy and impressive performance of Indian corporations.
- Also, the growth in the Indian equity market has been widespread, which can be seen in the large-cap mid-cap, and small-cap indices.
ii.Analysts has outlined various key factors which have contributed in the positive growth of Indian economy like: 47% increase in Foreign Direct Investment (FDI) during the early months of 2024, a decline in Brent crude prices, and significant Foreign Portfolio Investment (FPI) in the Indian debt markets.
iii.The MSCI EM index has increased by 7%in the Calendar Year (CY) 2024, while the Nifty has shown a stronger performance with a 15% return in USD terms. In contrast to it, Chinese equities have experienced a decline of 10%.
About MSCI EM IMI:
i.It is global index that includes large, mid, and small-cap stocks from 24 EM countries.
ii.This index represent 85% of the free floated-adjusted market capitalization in each of the included countries.
iii.It is monitored by passive funds with Assets Under Management (AUM) of approximately USD 125 billion. However, the main MSCI EM index is tracked by funds with assets of USD 500 billion.
About MSCI Inc.:
Chairman and Chief Executive Officer (CEO)- Henry A. Fernandez
Headquarters-New York, the United States of America (USA)
Established- 1969
