For the first time in over nine months, the UK has overtaken India as the sixth-largest equity market in the world as a weaker pound increased the appeal of large exporters dealing in London and uncertainties caused by the Adani Group pressured Mumbai stocks.
According to figures provided by Bloomberg, the combined market capitalisation of primary listings in the UK, excluding ETFs and ADRs, reached around $3.11 trillion on Tuesday, almost $5.1 billion more than their Indian equivalents. Since May 29 it hasn’t happened like that.
Investors, according to James Athey, director of investments at ABRN, “seeing a deep value opportunity in the UK” following the losses in the pound and the current course of government policy “less experimental.”
The proportion of financial, commodity, and defensive equities in the FTSE 100 is also “almost the perfect combination for now,” he stated.
The UK’s FTSE 350 Index, which consists of stocks in the FTSE 100 and the domestically focused FTSE 250, outperformed global equities last year. So far this year, it has gained 5.9%, surpassing a gain of 4.7% in the MSCI All-Country World Index. That’s partially due to the blue-chip FTSE 100 reaching new highs, which broke the 8,000 point barrier for the first time last week as its predominance by multinational corporations allows the benchmark to profit from a depreciating pound.
After relinquishing its position as the largest stock market in Europe last year, the UK’s equity market capitalization still trails France.
As a result of claims of stock manipulation and accounting fraud made by US-based short-seller Hindenburg Research, the share prices of companies in the Adani Group have plummeted, and the Indian stock market is currently dealing with both of these issues.
The market capitalization of the companies owned by Gautam Adani, one of Asia’s richest men, has decreased by about $142 billion since the Hindenburg report was released on January 24. The MSCI India Index has fallen 6.1% this year. In an effort to assuage traders concerned about the group’s access to funding, Adani has consistently refuted the allegations and reduced spending in addition to repaying loans.
As of Wednesday, losses in the index from a peak on December 1 had increased to more than 10%, setting it up to start a technical correction. Market participants have said that investor worries about the Adani enterprises remain, despite this, concentrated on the group as a whole rather than the larger Indian market.
“The negative Adani headlines have caused some concerns among international investors, but they’re mainly focused on the group,” stated Jian Shi Cortesi, a fund manager with GAM Investments, based in Zurich. “This could cause investors to be more selective in India, but we are not seeing investors avoiding Indian stocks in general.”