Geopolitical Tension Pushes Foreign Investors To Shift To Indian Market, Abandon China

Geopolitical Tension Pushes Foreign Investors To Shift To Indian Market, Abandon China
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After the shift Xiaomi’s production from China to India in 2019, and the production of Fire TV devices of Amazon in India, Apple became the latest to join in. Owing to the tense geopolitical relations between the United States and the Chinese communist government, and also following the COVID lockdown in China, Apple Inc has decided to move its iPhone 14 production from China to India. Amidst the ongoing slow down of the global market, the Indian economy is catching up with trends and reacting well, said Mark Mobius, veteran investor and Mobius Capital Partners’ founder.

He advises that having gold in the investor’s portfolio is always beneficial. As foreign investors flee China, Mobius is optimistic about the infrastructure of Indian stocks. “The interesting thing is that India is really bucking this trend… and it speaks very well for the policies that the government has pursued… the general buoyancy of the Indian market is very good,” he said in an interview to CNBC-TV18.

According to Bloomberg, the original assembling of products will be set up in Chennai, as the company announced. “We’re excited to be manufacturing iPhone 14 in India,” said Apple in an emailed statement earlier this week, without discussing production timelines. Apple’s China manufacturer Foxconn declined to comment.

As the Chinese governmental regulations for exporting changes, Apple, along with all PC and tech vendors, is moving fast to shift more of its manufacturing out of China. Furthermore, Apple has asked its suppliers to relocate the production of AirPods and Beats headphones to India.

The repercussions faced by the Chinese market have also been due to the continued conflict between Ukraine and Russia, along with the deepening of the monetary policy, which has allowed the imposition of the most powerful interest rate hiking campaign in a decade. This means investors are expecting India to take over more manufacturing shares from China. “I think India is really beginning to take more and more manufacturing share from China. The bureaucracy is going to be very, very good for India, you can see more and more companies moving manufacturing to India,” said Mobius.

The US Federal Reserve continues to raise the interest rates, which would have a negative impact on the global economy and stock markets. The Fed’s hike in interest rates is weighing on “investor sentiment”. Last month, with the end of the two-day meeting, the US central bank increased its policy rate by 75 points, i.e., a 3.00-3.25 percent range. When Feds raise their rates, the difference between the interest rates of India and the US narrows, meaning that the US dollar is more lucrative and the outflow of cash from India is higher.

Nonetheless, with manufacturers shifting to India and abandoning China, combatting the fluctuations in interest rates is expected to become easier.


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