In a world of Chinese dominance in the global economy, where several major Asian markets remain pegged to the Chinese one, India remains blissfully adrift of Beijing’s influence. The two Asian giants’ economies have often moved in opposite directions, with India having the lowest correlation to China amongst the major equities markets in the region. Indian focus on domestic consumption and export sectors remains broadly outside Chinese areas of interest. In recent times, this utter lack of interdependence has come to reward India handsomely.

Chinese Clampdown

In October 2020, Jack Ma, founder of tech company Alibaba and branded as the poster child of Chinese entrepreneurism, would have been an excited man. Alibaba’s subsidiary, Ant Financial Group, a Chinese fintech giant, was set for its $34.5 billion dollar dual listing in Shanghai and Hong Kong, surpassing Saudi Aramco to become the largest IPO of all time. Bidding for the listing was reportedly so aggressive that servers in Hong Kong broke down from the sheer number of orders.

However, the world’s largest listing never came to pass.

On November 3rd, just a couple of days before the scheduled listing, Jack Ma was summoned by Chinese regulators, and informed that the IPO would be halted, only later to be completely annulled citing regulatory lapses. While initially thought to be a consequence of Ma’s outspoken nature about the CCP’s policies, with the halting of the IPO allegedly being demanded by Premier Xi himself, this turned out to be just the start of a ruthless Chinese tech crackdown. After years of emulating Silicon Valley, China has had its largest policy shift in decades, to reflect the party’s return to its ideology as well as assuaging complaints of the masses at the expense of business interests of the ultra-rich.

The regulations have come at the expense of the Chinese wealthy class: close to a trillion dollars have been wiped out off Chinese stocks. In July this year, Chinese stocks in the US suffered its biggest two-day wipeout since the great recession. The crackdown has certainly been sector agnostic: Tencent has been ordered to end exclusive music licensing deals with major record labels, the online education sector was overhauled by a sweeping new framework, food delivery app Meituan’s shares fell after new worker protection rules were introduced etc. These are just select examples in a long list that are seen as levelling the scales, which have seen billionaires like Pony Ma losing $14 billion and Colin Huang losing $28 billion, the world’s largest wealth drop. The Chinese velvet glove that has guided the last four years has turned quickly turned into an iron fist.

India Reaps Benefits

Elsewhere, the fall in favour of Chinese markets has and could prove to be a blessing in disguise for markets elsewhere in Southeast Asia or South Asia. Investors have been left worried about the uncertainty and the heavy handedness of the Chinese government that can come swinging down at any point of time, and have begun to seek out less volatile markets, and India has become one such beneficiary.

Indian companies have proven to be robust in their own right. Earlier this year, food-delivery and restaurant platform Zomato, received bids worth $20.2 billion, eventually raising $1.3 billion, with its share price jumping nearly 80% after going public. Zomato’s stellar listing has been monitored with starry eyes by other firms on the wings, such as Walmart owned ecommerce platform Flipkart, edtech company Byju’s, chased by nearly every major investment bank with a proposed valuation between 40 and 50 billion dollars, or PayTM, fintech unicorn due for a $2.2 billion listing later this year.

The performance of these firms has been compounded by the anticipation of fallout from the Chinese markets, coinciding with a time where Indian firms become more independent and are tapping on the second largest consumer market in the world. Altogether, this has meant a large rally for India, putting the markets on course for its best performance since 2017, and making it the region’s best performer with $3.9bn raised in the first half of 2021 alone. While the CCP’s crackdown is expected to persist, whether the gains for India as well as its peers in Asia will continue to hold remains to be seen.

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