India only overweight among the top four global emerging markets

India is the only country among the top four emerging markets (EMs) where global investors have an overweight stance. China (including Hong Kong), Taiwan, South Korea, and India have the highest average weightage in the EM space, accounting for two-third allocations. 

“Of the four, only India is held overweight (0.59 per cent) the benchmark, on average, with China the largest underweight at -4.62 per cent. Russia and Mexico stand out as the largest overweight country holdings, with two-thirds of managers overweight Mexico at 0.98 per cent above benchmark and Russia at 1.06 per cent above bench, on average,” says analyst Steven Holden of Copley Fund Research, who publishes on Smartkarma. Experts believe the relative overweight positioning could have contributed to India's recent outperformance.

Money managers investing in global emerging market (GEM) space have large allocation to Asian equities. “Asia remains the dominant region for GEM managers with average allocations of 71.94 per cent, though this is some way shy of peak allocations of 75.8 per cent in October of 2020,” adds Holden. The fall in allocation towards Asia could be attributed to China, which is currently the biggest underweight in the GEM space. 

 “Allocations continue to drift lower, dragged down by a change in sentiment across the major stock holdings caught up in the 'Tech Crackdown',” Holden says.