Indian equity market has given stronger returns than China’s equity market since 2000

A report by Deutsche Bank said that since 2000, Indian equity markets have delivered stronger returns than China’s equity markets.

The report notes that although China has experienced strong economic growth, its equity market performance has been relatively modest, with real returns averaging +4.0 percent per year since 2000. In contrast, India has emerged as a leader in both emerging and developed markets. Offering one of the highest real equity returns of +6.9 percent per annum over the same period.

“India has the highest real equity returns (+6.9% per annum) compared to key EM and DM countries over 2000- 2024 QC,” it said.

The report also highlights that, by 2024, India and the US are among the few markets trading close to record-high CAPE (cyclically adjusted price-to-earnings) ratios. This metric, which measures earnings over a 10-year period, smoothes out cyclical variations, but cannot fully account for structural changes in market dynamics.

It notes that at the turn of the millennium, the CAPE ratio of the US S&P 500 reached unprecedented levels before falling in the early years of the 21st century, now back to heights reached only briefly in the last century. had only increased.

The report also argues that technological dominance, artificial intelligence (AI) advances, and structural shifts in earnings expectations justify these elevated valuations for the US.

It said, “Oilmen will argue that technological dominance and AI expectations offer the US a structural makeover, and perhaps India’s outlook is so positive that investors are willing to pay for the potential growth”.

It suggested that India’s positive growth outlook and its potential as a major player in global markets also explains why investors are willing to pay a premium.

Looking ahead to the new quarter-century (2025-2049), the report said India and the US started off on a higher note, but remain expensive compared to markets with more normalized valuations. This positions them as markets to watch, with their growth trajectories closely linked to investor confidence in their structural strengths and future prospects.