85 sovereign wealth funds and 57 central banks, representing USD 21 trillion in assets, claim that India has surpassed China as the most alluring emerging market for investment. According to a study by the international investment management company Invesco, perceptions of India are improving due to its increased economic and political stability, favorable demographics, regulatory reforms, and welcoming climate for sovereign investors.
The 'Invesco Global Sovereign Asset Management Study' research featured opinions from 142 chief investment officers, heads of asset classes, senior portfolio strategists, and representatives from 85 sovereign wealth funds and 57 central banks. Investors are readjusting their portfolios in the face of persistently high inflation and real interest rates. Sovereign wealth funds favor fixed income and private debt, while emerging markets (EMs) with strong demographics, stable governments, and aggressive regulation, particularly India, have become popular places to invest.
“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 the nations gaining from rising foreign business investment through "friend-shoring" and "near-shoring," which targets both domestic and international demand. Other nations benefiting from this trend include Mexico and Brazil. This was viewed as supporting currencies, domestic assets, especially debt, and current account deficits.