With USD 21 trillion in assets, 85 sovereign wealth funds and 57 central banks claim that India has surpassed China as the most appealing emerging market for investment. According to an Invesco study, perceptions of India are improving due to increased economic and political stability, favourable demographics, regulatory initiatives, and a welcoming environment for sovereign investors.
The 142 chief investment officers, asset class heads, senior portfolio strategists, and representatives from 85 sovereign wealth funds and 57 central banks contributed to the 'Invesco Global Sovereign Asset Management Study' report.
In the face of persistently high inflation and real interest rates, investors are rebalancing their portfolios. According to the report, sovereign wealth funds favour fixed income and private debt, while emerging markets (EMs) with strong demographics, stable governments, and proactive regulation, particularly India, have become popular places to invest.
"Among the Emerging Markets, India has piqued sovereign investors' interest, overtaking China," the report stated.
India is among the nations gaining from increased foreign corporate 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, including debt, and current account deficits.
On the scale of attractive EM markets for increasing exposure, India and South Korea continue to be the most attractive destinations, it said.