India Equity Investment Trusts in Japan Surge 11% in January

06 Feb, 2024

India Equity Investment Trusts in Japan Surge 11% in January

Japan’s retail investors are showing a strong inclination towards Indian stocks, driven by expectations of India emerging akin to China in economic prominence. In January, the assets of India equity-focused investment trusts in Japan witnessed a notable surge of 11%, equivalent to ¥237 billion ($1.6 billion), as per Bloomberg data. This growth indicates approximately ¥140 billion inflow into India equity funds, while Japanese stock funds experienced minimal net inflows during the same period.

This investment trend further solidifies India's status as Japan's favored emerging stock market, partly attributed to the introduction of tax-free investment accounts this year. Bloomberg's analysis of government data reveals that Indian equities saw the highest increase in holdings among developing economies last year, reflecting a broader interest in India's economic potential. Daiju Aoki, the regional chief investment officer at UBS SuMi Trust Wealth Management Co. in Tokyo, highlights India's appeal for economic growth, drawing investors' attention to the country as a whole rather than individual companies.

Conversely, Chinese shares witnessed a decline in investment interest among Japanese investors, marking the most significant drop among 14 emerging markets covered by Japan's international investment position data. This shift in investment preference coincides with China's economic challenges, including a property market downturn and deflationary pressures reminiscent of Japan's historic economic struggles.

While India's Nifty 50 Index remained relatively unchanged in local currency terms last month, it recorded a 4.2% increase in yen, contrasting with declines in the Shanghai Composite Index and the Hang Seng Index for yen-based investors. Economists project India's economic growth to outpace China's in the coming years, supported by favorable demographics with India's population expected to rise significantly by 2050 compared to a decline projected for China by the United Nations