Billions of dollars are invested in Indian stocks by Japanese individual investors

Billions of dollars are invested in Indian stocks by Japanese individual investors

Billions of dollars are invested in Indian stocks by Japanese individual investors

Bloomberg data shows that the total assets of India's equity-focused investment trusts in Japan increased by 11% in January, or ¥237 billion ($1.6 billion).

Retail investors from Japan are flooding Indian markets with cash since they hope that India will become the next China.

Bloomberg data shows that the total assets of Indian equity-focused investment trusts in Japan increased by 11% in January, or ¥237 billion ($1.6 billion). The data indicates that there were almost no net inflows into Japanese stock funds last month, despite the advances of Indian equities on a yen basis, indicating inflows of around 140 billion yen into India equity funds.

The popularity of Indian shares over other developing stock markets in Japan has grown, in part because of the introduction of tax-free investment accounts this year. After accounting for net purchases and asset prices, a Bloomberg analysis of official data shows that last year, India's stock holdings climbed more than those of any other emerging nation.

"As the next China experiences economic growth, interest in Indian stocks is growing," said Daiju Aoki, regional head investment officer at UBS Sumi Trust Wealth Management Co. in Tokyo. "India as a whole is more interesting to customers than specific companies."

On the other hand, out of the 14 developing economies that Japan's statistics on foreign investment conditions covers, flows into Chinese equities decreased the most. Institutional and individual investment positions are included in the numbers.

The largest lender in the world, Japan, is sending money to China at a time when China is dealing with deflation and the burst of an asset bubble—the same economic problems Japan has been dealing with for decades.

Last month, the Nifty 50 index in India remained almost unchanged in local currency terms but gained 4.2% in yen as the value of the Japanese yen fell. The Shanghai Composite Index and the Hang Seng Index declined 3.5% and 5.7%, respectively, for investors denominated in yen.

According to economists, China's annual economic growth is predicted to stay around 5% throughout this time, whereas India's is predicted to average more than 6% until at least the second quarter of 2025. India's demographics are also favorable, as a UN assessment projects that its population would increase by 17% by 2050 while China's is predicted to decrease by 7.9%.