India’s equity m-cap to hit $6.1 trn by 2027: Morgan Stanley

The market capitalisation of Indian equities is likely to hit $6.1 trillion by 2027, up from $2.3 trillion in 2017, Morgan Stanley has said in its recent Asian equity strategy report, titled Asia’s Financial Acceleration–Moving Centre Stage.

“Within Asia, India’s equity market is expected to grow the fastest, at 10.1 per cent compounded annual growth rate (CAGR), touching $6.1 trillion by 2027. The market cap of China/Hong Kong equities combined will increase at a 7.9 per cent CAGR to $30 trillion from $13.8 trillion, almost the current size of the US equity market cap of $31 trillion. Japan would be the next largest equity market at $8 trillion,” the report, co-authored by Jonathan Garner, the firm’s chief Asia and emerging markets equity strategist, said.

The research house also expects the market cap of Asian equities (combined) to double to $56 trillion over the next 10 years. This scorching pace of growth, it said, would put Asia at the numero uno position, ahead of North America as the world’s largest equity market region by 2027.

“Our modelling projects that Asia’s total market cap will double to $56 trillion by 2027. Asia will overtake North America (the US and Canada) as the largest equity market region, as it generates over half of the world’s growth in market cap. This equates to compound market cap growth of 6.5 per cent per annum versus nominal GDP (gross domestic growth) growth of 6 per cent, with market cap to GDP rising to 118 per cent from 113 per cent,” the report said.

North America, Europe and other non-Asian G20 regions would see average growth of 3.23.4 per cent over the next decade, the financial services firm said. Asia is projected to generate 56 per cent of the global market cap growth, followed by North America (29 per cent) and Europe (11 per cent), it estimates.

In the Asian region, Morgan Stanley said, pension funds, mutual funds, insurance, and equity and debt capital markets were primed for accelerating growth, driven by a rapidly rising household wealth, demographic change, structural reform, technological change, and development of institutional investment capacity.

Region-wise, Singapore, Hong Kong, Australia, and Japan are the most advanced in terms of financial market development and integration, the research firm said. China, India, Indonesia, and Pakistan are the least advanced and thus, have the highest scope for development.

The research house also expects the market cap of Asian equities (combined) to double to $56 trillion over the next 10 years. This scorching pace of growth, it said, would put Asia at the numero uno position, ahead of North America as the world’s largest equity market region by 2027