Mumbai Stock Market Growth Outperforms Shanghai Over Past Decade

Jan. 6 – Mumbai may be on the way to overtaking Shanghai as a financial hub in the coming years based on data revealed by the Financial Times which shows that the Bombay Stock Exchange’s main index significantly outperformed the Shanghai Stock Exchange’s main index in terms of growth in the past decade.

The Bombay Stock Exchange (BSE) Sensex grew by 249 percent over the last 10 years, while the Shanghai Stock Exchange (SSE) Composite Index managed 140 percent growth. This is more remarkable given the Shanghai market has the advantage of a fixed population access; Chinese nationals can only invest in the Shanghai or Shenzhen exchanges and require special permission to acquire stocks from overseas. Indians meanwhile are free to invest where they choose, however increasing amounts of foreign capital and returning Indian investment are now flowing back to India (the Shanghai Stock Exchange places limitations on foreign investment with a only 79 foreign institutions currently able to buy and sell A (locally priced) shares).

Another influence to the Chinese market has been increases often caused by government liquidity due to the stimulus plan. Speculations on bubbles are rampant when it comes to China’s indexes, again a feature India’s exchange does not tend to have. Government interference in the Mumbai market is far more limited.

The BSE traces its roots back to 1830, with its primary trading index, the Sensex, being first compiled in 1986 with a base level of 100. The BSE is now the largest exchange in South Asia and the 12th largest globally with an estimated market capitalization of US$1.03 trillion in June 2009. There are over 4,o00 listed companies on the exchange. In contrast, the SSE was only reformed in 1990 and lists some 900 companies. It is the sixth largest exchange in the world with a market capitalization of US$2.07 trillion, but is dominated by government-owned companies and is not fully open to foreign investors. Shanghai’s primary index, the SSE Composite IX was formed in 1991 with a base value of 100.

At the close of the markets today, the BSE Sensex 30 Index stood at 17,685.31 and the SSE Composite IX at 3,254.22.

For reference, 2point6billion.com’s sister sites China Briefing and India Briefing carry the most updated stock markets indexes for Shanghai, Shenzhen and Mumbai.