China’s recent economic policies and its large market have caught the attention of global investors, boosting investment in the country. However, many investors still see India as a promising investment option, and the flow of funds into India remains positive, though at a slower pace.

Investment in India has decreased slightly, but the overall sentiment towards India is still strong, which indicates that investors are interested in both China and India and this trend is likely to continue for some time.

Cameron Brandt from EPFR Global said in an interview with CNBC-TV18 on Friday that while India received less than 1% of the money flowing into China this week, India still saw positive inflows, which is a good sign. He explained that supportive government policies are driving China’s market growth, but India’s market remains healthy even though inflows have slowed down.

Also Read: China’s biggest stimulus to revive its sinking real estate market: Seven points

Indian stock markets are experiencing a significant decline, with nearly ₹10 lakh crore (₹10 trillion) in investor wealth lost on Thursday. The Nifty index has dropped by 1,000 points from its recent high, while the Nifty Bank index is close to losing all the gains it made between September 11 and 27, when it was hitting new peaks. This shows that both major indices are under heavy selling pressure, leading to a substantial loss in market value.

Emerging Markets expert Adrian Mowat said that global fund managers have typically invested more in India and less in China. However, recently, they have reduced their investments in India to increase their investments in China.

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Money is moving from India to China, says Adrian Mowat

“My understanding of the positioning of active managers, they are overweight, which is a good place to be, because India has been a significant outperformer. If you wanted to outperform as an active manager, you needed a big exposure to India, and you want it to be very underweight China, because up until about 30 days ago, or even actually 14 days ago, being underweight China was the smart move to have,” Mowat said.

Similarly, Chris Wood of Jefferies, a strong supporter of India’s long-term growth, slightly lowered his investments in India and increased those in China, while still maintaining a positive outlook on India.

Also Read: Jefferies’ Chris Wood cuts India weight but retains ‘overweight’ stance

While China’s stock market has seen a strong rally, with the MSCI China Index rising over 30% from a recent low, challenges remain. Meanwhile, South Korea, Indonesia, Malaysia, and Thailand have experienced net outflows, and Japan saw significant withdrawals from its equity market in September.

Also Read: China’s stock boom may turn to bust as in 2015, Nomura warns

China’s markets are currently closed for the National Day holiday from October 1st to 7th, and trading will resume on October 8th.

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