Key Points
- South Korean investors are shifting from China to India for higher returns.
- India-focused funds have grown significantly, with returns outperforming other markets.
- Korean asset managers are launching more India-related ETFs to meet investor demand.
- Analysts expect India’s stock market to continue rising, driven by strong economic growth and global supply chain shifts.
South Korean investors, previously drawn to the U.S. and China for higher returns, are now flocking to India. Dubbed the “Next China” by global investors, India has become a major destination for wealthy Koreans seeking profitable opportunities.
According to industry data, India-focused funds created by Korean asset managers have attracted inflows of 1.15 trillion won ($881 million) in 2023. This surge in investment comes as Korean investors reduce exposure to China-focused funds, which saw outflows of 365.7 billion won this year.
The total net asset size of Indian stock funds managed by Korean asset managers has grown to 4 trillion won. These funds have consistently performed well, with 32 Indian equity funds reporting an average return of 18.61% over the past six months.
This is the highest among Korea’s overseas equity funds, outpacing US-focused funds (7.87%), China (5.4%), and other markets like Vietnam and Europe. Over longer periods, Indian equity funds posted even more impressive returns, with gains of 34.21% over one year, 47.98% over three years, and 149.16% over five years.
Wealthy South Korean investors view India’s economy as stable, unlike other emerging markets like Vietnam or China, with consistent and reliable returns. A private banker in Seoul’s affluent Gangnam District noted that India and the U.S. are top investments for those seeking long-term gains.
In response to this growing interest, Korean asset managers are launching more India-focused exchange-traded funds (ETFs). Samsung Asset Management introduced Korea’s first Indian-themed ETF, the KODEX India Tata Group. At the same time, Mirae Asset Global Investments launched the TIGER India Billion Consumer ETF, targeting India’s top 20 consumer goods companies.
Other notable entries include Korea Investment Management’s ACE India Consumer Power Active and ACE India Market Representative BIG5 Group Active, which focus on growth sectors like home appliances, healthcare, and India’s top five companies.
Despite some concerns about overvaluation, analysts remain optimistic about the Indian stock market’s future. The International Monetary Fund (IMF) projects India’s real GDP growth to average over 6% annually through 2025. India’s strong economic growth and its role in the global supply chain restructuring spurred by the US-China trade tensions are expected to continue fueling investor enthusiasm.
