Although the Indian stock market is declining, personal investment funds are flocking to exchange-traded funds (ETFs) that invest in India. This is interpreted as betting on the prospect that India will gain windfall profits against the backdrop of the tariff war originating from the United States, leading to a rise in the Indian stock market in the medium to long term.
Funds are flowing out of ETFs that invest in other emerging countries such as Vietnam and Mexico. In particular, despite a rise in the Vietnamese stock market this year, investment sentiment has been dampened by the judgment that Trump risk will have a significant impact.
According to the Korea Exchange on the 12th, individual investors have net purchased a total of 20.3 billion won in 10 domestic listed ETFs related to India, including 'TIGER India Nifty 50' (8.1 billion won) and 'KODEX India Nifty 50' (7.8 billion won) from January 1 to March 11 this year.
The Nifty 50 index, a major index in India, has dropped more than 5% this year. Compared to its peak in September last year, it has fallen by more than 14%. Concerns about slow economic growth have increased due to poor manufacturing sector indicators such as the manufacturing purchasing managers' index (PMI) and private consumption indicators in the second half of last year.
Additionally, the Chinese and Indian stock markets have a mutually substitutive nature. At the beginning of the year, the rise in the Chinese stock market conversely affected the Indian stock market's performance.
Despite the sluggishness of the stock market, investors are focusing on the Indian market. It is interpreted that as the previous adjustments conclude, investment funds are flowing in on the prospect that the Indian stock market will rebound soon.
Kim Geun-a, a researcher from Hana Securities, forecasts that India's economic growth rate will increase in the second half of the year and advised expanding investment proportions. Kim noted, 'The Indian stock market appears to be in an oversold state,' adding that 'robust support is expected from the government's infrastructure development, consumption promotion policies, and interest rate cuts this year.'
LS Securities analyzed that although investor sentiment was dampened at the beginning of the year due to the possibility of India becoming a target of reciprocal tariffs under the Trump administration, India could benefit in the future as production bases in China transfer to India, replacing China, Mexico, and Canada. LS Securities researcher Ha Jang-kyun stated, 'India is showing the highest growth rate even in a global environment of high interest rates,' and added, 'There are concerns about slowing growth, but the annual growth rate estimate remains at the highest level of around 6.5%.'
The investment outlook for other emerging countries, excluding India, is not bright. Experts noted that caution is necessary for investments in Vietnam, Indonesia, and Mexico.
Vietnam recorded a GDP growth rate of 7.09% last year due to a surge in exports and foreign direct investment (FDI). The representative index of Vietnam, the VN index, has also risen 5.2% compared to the beginning of the year. However, it is expected to suffer the impact of the tariff policies of the Trump administration.
Kim Geun-a stated, 'The valuation of the Vietnamese stock market appears to be overheated, and it seems to have reached a recent short-term peak,' adding, 'As Vietnam's exports to the U.S. account for 25% of its GDP, if tariffs are imposed in the future, it will suffer a greater impact from export declines than other emerging countries.'
In Indonesia, the burden of financial stress is significant, causing a slowdown in the growth of the major electric vehicle industry, while in Mexico, analyses have emerged suggesting that tariff negotiations with the United States are applying downward pressure on Mexico's economy. Hana Securities has presented a 'neutral' opinion on the Vietnamese and Indonesian stock markets.
Individual investors net sold 3 billion won and 300 million won in 'ACE Vietnam VN30 (synthetic)' ETF and 'ACE Mexico MSCI (synthetic)' ETF, respectively, this year.