While China lost more than US$3 trillion on the stock markets, India’s benchmark Sensex eked out a 0.6 percent increase over the past three months making India the only market to rise in this period. Although the Indian market has been bullish, while the Chinese indexes have crashed, the result is from a few foreign investors that have hedged their emerging markets money on India. Overall however, analysts expect that China’s crash will have little to do with Indian’s gain in the near term.
The reason being that foreign investors hold less than one percent of Chinese stocks in China. The stocks that are held in Chinese companies are either that listed in Hong Kong or in the USA or in other countries. These stocks had not moved as much as those listed in China. Thus the fall in share prices in China will not result in fund managers withdrawing money from other markets, ruling out any near term impact on India. In the long run however, if Chinese stocks continue to drop, global markets including India will be affected.