The forward earnings multiples of Indian stocks are also considerably higher than those in China, reflecting the changing preference among emerging markets by FIIs. The situation is evolving rapidly, however, with Beijing’s attempts to crank up the economy. The Hong Kong Stock Exchange has already regained its position as the world’s fourth biggest by market cap after having been surpassed briefly by India. The recent correction in Indian mid- and smallcaps, prodded by regulatory concern over valuation froth, will influence investor expectations.
The emergence of Mumbai as Asia’s billionaire capital also serves as a marker for wealth concentration. India’s economy in nominal dollars is 22% the size of China’s and 14% that of the US. In per-capita terms, again in nominal dollars, India is at 21% of China’s level and at 3.4% of the US. India is among economies adding most to the global billionaire population despite not being directly exposed to technology that is driving valuations on Wall Street to extraordinary levels. As India plugs deeper into a world economy driven by technology and alternative energy, given its current concentration of wealth, it should continue to contribute an outsized number of the uber-wealthy.
There is a hurdle, though, in India playing catch-up in the wealth game. For the rising tribe of Indian billionaires to amass wealth on a truly global scale, they would need to move out of the comfort zone of the domestic market. Their enterprise will need a far bigger global footprint in manufacturing and services.
