Who has the best investment case in 2025 — China or India?

It celebrated celebrating its status as the biggest country by population, overtaking China, and earlier this month Indian 18-year-old Gukesh Dommaraju dethroned China’s Ding Liren to become the youngest ever chess world champion.

Just two years ago, the country launched a successful Moon mission, highlighting to the world its significant advances in space science and technology.

But with just a handful of specialist investment funds and trusts relating to India and China available to UK investors, where are investors going to get their India fix?

Will the popularity of India continue? Will the fabled ‘sleeping giant’ of China wake up once again, and will allocators continue to buy Asia-Pacific funds and investment trusts to capitalise on growth opportunities outside of the US megacap tech stocks?

The case for India 

One can get an idea of how allocators have changed in terms of their preference for China and India from how the weights of both countries have changed in the benchmark MSCI Asia Pacific ex Japan index.

Reflecting the flow direction, China’s weighting in the index has fallen from about 36 per cent in 2020 to 26 per cent in November this year, whereas India’s weight has doubled from 9 per cent in 2020 to approximately 19 per cent over the same period.

According to Hugh Gimber, global markets strategist at JPMorgan Asset Management, the long-term outlook for India’s economy is strong. 

He points to demographic advantages, such as the fact that a quarter of the world’s population of people 25 and under are thought to live in India.

This statistic stands in stark contrast to China’s ageing population. 

Yoojeong Oh, portfolio manager of the Abrdn Asian Income fund, says Asia is seeing signs of “structural promise that could prove rewarding for growth-seeking investors”.

This applies to both China and India, which offer exposure to the domestic consumption story. Rising incomes, urbanisation, and the expanding middle class all point to a growing demand for consumer products.

Then there is the green transition in India, where policy efforts mean that electrification is an area of opportunity.

India does not suffer from the same predicament as China.

Gene Salerno, SG Kleinwort Hambros

The Abrdn fund holds Power Grid Corp of India, which she says is “poised to play a key role in the growth of renewable energy delivery in future as part of the country’s drive towards green energy”.

Oh adds: “India has seen its equity market rise on the back of foreign investment inflows and positive economic indicators that have enhanced the country’s attractiveness to global investors.

“As we look to 2025, this trend is unlikely to reverse any time soon.”