TheNFAPost Podcast

A unique trend has emerged in terms of fund flows that shows China losing out to India. 

Sovereign funds are finding greater advantage in India as against China and other investment destinations. This reversal began in 2019.

A Sovereign Wealth Fund is a mechanism for countries to invest their reserves into markets or other investments, instead of keeping it in the central bank or channeling it back into the economy.

Many nations use these funds to make good returns on their investments for the benefit of the nation’s economy and its citizens.

The primary functions of an SWF are to stabilize the country’s economy through diversification and to generate wealth for future generations.

These funds are used for international investments, however, India invests these funds only in India as Russia does. Countries like Norway, China, Saudi Arabia, Australia, and others, invest these funds in international markets.

According to a report, in 2020, the Year-To-Date data suggests a three-fold increase of Sovereign funds flowing in India than China. The Sovereign Funds have invested around USD 14.8 billion in India. 

In 2015, the Sovereign funds invested just around USD 4.2 billion in India compared to around USD 21.80 billion in China,  After 2019, this has changed. In the same year, the sovereign fund investment in India was around USD 10.10 billion compared to China’s around 6.4 billion only.

The reason for this trend reversal is the ongoing trade war between the US and China. The problems between the two nations have even increased more after China came under the grip of the Covid pandemic and allegations of spreading the pandemic around the world.

In this hour of crisis, the Sovereign Wealth Funds have found India to be a safe and attractive investment destination. 

Year-To-Date refers to the period beginning from the first day of the fiscal year up to the current date. YTD information is useful to analyze business trends or compare performance data to competitors in the same industry. 

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