India's equity market-cap to hit $6.1 trillion by 2027: Morgan Stanley

Market-capitalisation (market-cap) of Indian equities is likely to hit $6.1 trillion by 2027, up from $2.3 trillion in 2017, predicts Morgan Stanley in its recent Asian equity Strategy Report titled: Asia’s Financial Acceleration – Moving Centre Stage.

“Within the Asian region, India's equity market is expected to grow the fastest of the major markets at 10.1 per cent compounded annual growth rate (CAGR), reaching $6.1 trillion by 2027. Market-cap of China/Hong Kong equities combined will increase at a 7.9 per cent CAGR from $13.8 trillion currently to $30 trillion, almost the current size of US equity market-cap of $31 trillion. Japan would be the next largest equity market at $8 trillion,” the Morgan Stanley report co-authored by Jonathan Garner, their chief Asia & emerging markets equity strategist says.

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 feels, will 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 (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 growth of 6 per cent, with market cap to GDP rising from 113 per cent currently to 118 per cent.” 

On the other hand, North America, Europe and the Other Non-Asian G20 regions would see average growth of 3.2–3.4 per cent over the next decade Morgan Stanley says. As a result, Asia is projected to generate 56 per cent of global market-cap growth, followed by North America (29 per cent) and Europe (11 per cent), it predicts. 

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

Region-wise, Singapore, Hong Kong, Australia, and Japan, it feels, are the most advanced in terms of financial market development and integration, Morgan Stanley says; while China, India, Indonesia, and Pakistan are the least advanced and thus have the most scope for development.