India becomes no. 1 market to invest in; overtakes China

According to a survey by Invesco Global Sovereign Asset Management, India has surpassed China as the most desirable emerging market to invest in. 142 chief investment officers, heads of asset classes, senior portfolio strategists, and representatives from 85 sovereign wealth funds and 57 central banks were all represented in the report.

A Middle Eastern-based development sovereign claims that India is now a “better story” in terms of economic growth and political stability among other things, the rapidly expanding demography, positive regulatory actions, and a welcoming climate for sovereign investors. According to the survey, India is one of several nations, including Mexico and Brazil, that profit from growing foreign business investment catered to both domestic and global demand.

Numerous emerging nations, like Brazil, which are seen as being more attractive for fixed-income investments, are anticipated to beat inflation and eventually stop tightening and start loosening monetary policy. The Invesco report said, “At the same time important commodity countries including Brazil and Indonesia were seen as well placed for the green transition and electric vehicle revolution, and thus potentially an important source of diversification for sovereigns with more commodity revenue streams.”

Inflation will increase during the next ten years, according to more than 85% of the 85 sovereign wealth funds and 57 central banks. In such a scenario, gold and bonds from emerging markets are regarded as safe investments. This change may have been precipitated by the West’s decision to freeze nearly half of Russia’s $640 billion in gold and foreign exchange reserves in retaliation to the invasion of Ukraine.

A “substantial share” of central banks expressed alarm about the precedent that had been created. Nearly 60% of respondents claimed that it had increased the appeal of gold, and 68% were storing their reserves at home, up from 50% in 2020.