Global investors have been pulling money out of India’s stock market at an unprecedented rate, redirecting funds towards Chinese equities in a significant shift in investment trends.

Over the past six months, foreign investors have withdrawn nearly $29 billion from Indian equities, marking the highest outflow recorded in any similar period.

The exit comes after India’s stock market surged to record highs in September 2024.

The Nifty 50 index has experienced a 13% decline since then.

Meanwhile, Chinese markets have attracted investors, driven by renewed optimism about government stimulus policies and the promise of growth in the artificial intelligence sector.

Hong Kong’s Hang Seng Index has surged 36% since late September, drawing in capital that was previously flowing into India.

Asset managers, including Morgan Stanley and Fidelity International, have been scaling back their exposure to Indian equities and reallocating funds to Chinese investments.

Economic conditions trigger a selloff

India’s stock market had been riding high on strong corporate earnings and economic growth, but slowing performance in key sectors has impacted investor sentiment.

Rising inflation and high interest rates have weighed on company profits, with Nifty 50 firms recording only a 5% earnings growth in the December quarter—marking the third consecutive quarter of single-digit expansion.

Prior to this slowdown, companies had enjoyed two years of double-digit profit increases, making the market particularly sensitive to any signs of weakness.

As a result, India’s stock market, previously considered an attractive destination for foreign investments, has seen a sharp correction.

Valuations had been exceptionally high, with global investors rushing to take advantage of the country’s growth potential.

However, concerns about a slower economic outlook have triggered a selloff, wiping out over $1 trillion in market value since September.

China attracts new inflows

While investors reduce their exposure to Indian markets, China has been regaining favor due to its aggressive economic stimulus efforts and recovering market sentiment.

Beijing has introduced a series of policy measures aimed at stabilizing its economy, including incentives to support technology companies and increased investment in artificial intelligence research.

A significant driver of this shift has been the success of Chinese startup DeepSeek, which has fuelled optimism in AI-related stocks.

With the Hang Seng Index rebounding strongly, institutional investors are increasingly viewing China as a more attractive option, particularly given the relative affordability of Chinese stocks compared to Indian equities.

For the first time in two years, China now holds a larger weight than India in Aubrey Capital Management’s portfolio, a shift that reflects broader market sentiment.

Asset managers are locking in profits from India’s stock market boom and reallocating capital to China and other emerging markets in Southeast Asia.

Can Indian stocks bounce back?

Despite the recent selloff, some investment firms remain optimistic about India’s long-term prospects.

While companies such as Morgan Stanley and Fidelity International have trimmed their positions, they still maintain an overweight stance on Indian equities.

Some analysts believe that the market correction presents an opportunity for long-term investors to re-enter at lower valuations.

However, further downside risks remain. If India’s economic growth continues to slow or corporate earnings remain weak, additional outflows could occur.

On the other hand, if inflation stabilises and interest rates ease, investor confidence may return, potentially reversing the outflow trend seen in recent months.

For now, global investors are closely watching economic indicators in both India and China to determine where their capital will flow next.

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Santander has announced plans to close nearly a fifth of its UK branches as part of a broader network overhaul, putting 750 jobs at risk.

The retail bank will shut 95 out of its 444 high street outlets by June and will also reduce services or hours at over 50 additional locations.

The move is aimed at adapting to changing customer habits, as digital banking continues to grow rapidly.

The lender had previously stated in January that it was not planning any permanent closures in 2025.

However, the latest decision marks a significant shift in strategy.

In addition to closures, 18 branches will transition to being counter-free, while 36 will operate with reduced hours.

Rising digital banking prompts closures

“Closing a branch is always a very difficult decision and we spend a great deal of time assessing where and when we do this and how to minimise the impact it may have on our customers,” a spokesperson for Santander UK said.

“As a business, we must move with customers and balance our investment across all the places where we interact with customers, to deliver the very best for them now and in the future.”

The bank cited a “rapid movement” of customers toward digital banking as a key factor.

Since 2019, digital transactions have increased by 63%, while branch-based financial transactions have dropped by 61%.

More than a fifth of current accounts are now opened online, and mobile banking users have surged by 56% in the same period.

New service model to support customers

Following the restructuring, Santander will operate 349 branches in the UK, including 290 full-service locations, 36 with reduced hours, and 18 counter-free branches.

The bank is also rolling out its “Work Café” concept, which will function as community hubs offering co-working space, high-speed WiFi, and event hosting.

To mitigate the impact of closures, Santander will introduce “community bankers” who will provide face-to-face support at banking hubs and visit affected areas weekly.

The bank stated that even after the closures, 93% of the UK population would still be within 10 miles of a Santander branch.

Industry-wide trend of branch reductions

Santander’s move follows a broader trend among UK banks, reducing their physical footprints and adapting to the cost pressures and efficiency demands posed by the digital banking shift.

There is an industry-wide effort to balance in-person banking with the growing reliance on online and mobile services.

Lloyds Banking Group recently announced plans to close 136 branches across its Lloyds, Halifax, and Bank of Scotland brands.

By the end of 2025, Lloyds will have 756 branches remaining, down from 932.

Santander reaffirms UK presence despite takeover rumours

Despite media reports suggesting that Santander was reviewing its UK operations, the bank has reaffirmed that its UK unit remains a core part of its global business model.

Reports had indicated that Barclays had explored a potential acquisition of Santander UK earlier this year, but discussions did not progress beyond preliminary talks.

Santander, which employs around 18,000 people in the UK, remains committed to its operations despite the latest restructuring move.

However, the changes highlight the ongoing transformation of the banking sector, where digital services are taking precedence over traditional high street branches.

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Turkey’s financial markets were thrown into turmoil on Wednesday following the arrest of Istanbul’s mayor, Ekrem Imamoglu, a leading opponent of President Recep Tayyip Erdogan.

The lira plunged more than 10% to record lows before recovering slightly, and the benchmark Borsa Istanbul 100 Index fell 6%, while banking stocks slumped over 9%.

Government bond yields surged to their highest levels this year, as investors dumped Turkish assets in response to the political crisis.

The arrest comes just days before the Republican People’s Party (CHP) was set to select its candidate for the next presidential election, with Imamoglu widely expected to be the frontrunner.

Turkish authorities also revoked his university diploma on Tuesday, a move that could have disqualified him from running.

His detention has sparked accusations of political interference, with CHP leader Özgür Özel calling it a “coup.”

Selloff driven by reaction from local investors

The arrest sent shockwaves through Turkey’s financial system, as investors who had become used to increased stability in Turkey following the economic crisis of 2023, feared an escalation of political instability.

“Turkish assets are under strong selling pressure,” said Piotr Matys, senior FX analyst at In Touch Capital Markets.

“To some investors it’s also a reminder that President Erdogan intends to tighten his grip on power even more by attempting to prevent his biggest political rival from running in presidential elections due in 2028, although early polls can’t be excluded.”

Local investors, who dominate the Turkish equity market, reacted swiftly, driving a broad selloff in stocks.

Data from Turkey’s securities depository shows that domestic investors hold around 62.5% of Turkish equities, making them particularly sensitive to political uncertainty.

Impact spreads to emerging markets like Hungary, Poland

The market turmoil in Turkey rippled into global markets, with emerging-market peers also taking a hit.

The Hungarian forint weakened by as much as 0.9% against the euro, while the Polish zloty declined.

In the broader market, a gauge of emerging-market currencies fell 0.2%, and stocks in the MSCI Emerging Markets Index dropped after three consecutive days of gains.

“This is a bit of a shock to the system – the trend, at least recently, has been toward greater stability, whether that be economic or political,” said Nick Rees, head of macro research at Monex Europe Ltd.

The selloff extended to offshore markets, with overnight lira swap rates jumping by more than 10 percentage points to 48%, signaling a significant unwinding of carry trade positions.

What does it mean for Turkey’s economic outlook

The political turmoil comes at a time when global investors had been turning more optimistic about Turkey’s economic trajectory.

Recent improvements, including better-than-expected inflation data, an interest rate cut, and hopes for closer ties with the European Union, had driven Turkish stocks into a bull market earlier this month.

However, the latest developments have rattled investor confidence and cast doubt on Turkey’s economic stability moving forward.

Elsewhere in emerging markets, Ukraine’s dollar bonds fell sharply following a lack of progress in US-Russia talks, and Indonesia’s central bank kept interest rates unchanged for a second straight month to protect the rupiah from capital outflows.

In Brazil, central bank president Gabriel Galipolo is set to lead a rate decision expected to raise the benchmark rate from 13.25% to 14.25%.

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The sell-off in big tech stocks has deepened. The “Magnificent 7” stocks, which drove much of the US market rally over the past two years, are now dragging the major indices lower.

The group, which includes Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla, is on track for its worst quarter since late 2022.

The sharp reversal in these market leaders has raised questions about whether they are still too expensive or finally becoming attractive after months of declines.

A painful quarter for the giants

The Bloomberg Magnificent 7 Total Return Index is down 16% this year, slipping over 20% from its December highs.

At the same time, the tech-heavy Nasdaq 100 has dropped more than 12% from its peak and has officially entered correction territory. The index is now down 7.3% year-to-date.

Among the worst performers is Tesla, which has plunged 44% in 2025, while Alphabet, Apple, and Nvidia are each down over 14%.

Amazon and Microsoft are down 12% and 9% respectively. Even Meta, which was up as much as 26% earlier this year, is now slightly negative year-to-date, down 0.5%.

The weight of the Magnificent 7 on the S&P 500 cannot be overstated. Combined, these stocks account for roughly 30% of the index’s market capitalization, amplifying the impact of their declines.

Goldman Sachs recently revised its S&P 500 target to 6,200 from 6,500, citing the drag from big tech as a key reason.

More than half of the S&P 500’s losses this year can be traced back to the fall in these seven stocks.

Why the sell-off accelerated

Several factors have contributed to the sharp decline in valuations.

Growing fears of a slowing US economy and ongoing uncertainty around President Trump’s trade policies have weighed on sentiment.

Tech investors have also started to question whether the billions being poured into artificial intelligence will deliver the kind of returns needed to justify the sector’s lofty valuations.

Most of them have been actively reducing exposure to these large-cap tech names after two years of outperformance, rotating into broader market plays.

The equal-weighted S&P 500 is outperforming the market cap-weighted version by 4 percentage points year-to-date. All evidence points to the fact that selling pressure is concentrated in the largest names.

Cathie Wood’s Ark Innovation ETF recently sold Meta shares for the first time in nearly a year, which shows that even bullish investors are reassessing risk in the sector.

While Wood is rotating into names like Tesla and crypto-adjacent stocks such as Coinbase, the broader picture reflects how investors are moving away from large-cap tech following two years of outsized gains.

Analysts are also lowering the price targets of the Magnificent 7 stocks.

Valuations: Still rich or finally reasonable?

Despite the declines, valuations for the Magnificent 7 are mixed.

On average, the group still trades at 26 times expected earnings, according to Bloomberg.

That’s down from recent highs but still well above the lows of 2018 and 2022, when similar corrections took place. Back then, valuations fell to around 19 times forward earnings.

Some stocks in the group are still trading at elevated levels.

Tesla, for instance, remains expensive even after its steep fall, trading at 82 times expected earnings.

Apple trades at 29 times, while Alphabet, the cheapest in the group, trades at 18 times forward earnings, which is still higher than its 2022 low.

The market is divided. Some investors see the recent drop as a buying opportunity, while others warn that more downside is possible.

According to some analysts, for the broader market to rebound, the Magnificent 7 need to stabilize and participate. Without them, the weight of their market cap could keep indexes under pressure

Oversold or undervalued?

Beyond the headlines of falling stock prices, there are signs that valuations for parts of the group are beginning to reset to more compelling levels.

Google, Amazon, and Nvidia are now trading below their projected earnings growth rates.

This means their price-to-earnings-to-growth (PEG) ratios are below 1, a level typically seen as undervalued.

For large-cap tech giants, this is unusual and suggests that the market is discounting their future potential too heavily.

In simpler terms, these companies are priced as if they won’t deliver on their expected growth, despite strong fundamentals.

It’s rare for businesses of this size to have PEG ratios below 1, and it may indicate that at least part of the sell-off has been overdone.

Meta, Microsoft, and Apple are harder to judge.

Their valuations depend more heavily on future earnings revisions, and the current macro uncertainty makes those projections murky.

Tesla, meanwhile, stands apart. Its high valuation, low margins, and unique risks — including reliance on Elon Musk’s vision and leadership — make it the most volatile and speculative of the group.

The question investors now face is whether these tech giants are simply correcting after years of outperformance or if the market is starting to fundamentally reassess the growth and profitability assumptions behind these names.

While the long-term dominance of these companies is unlikely to vanish overnight, the recent sell-off suggests that markets are less willing to tolerate high valuations without concrete earnings delivery.

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A proposed sale of strategically significant port assets by Hong Kong’s CK Hutchison to a BlackRock-led investment group has ignited a firestorm of controversy, thrusting the transaction into the complex arena of international geopolitics.

Beijing’s mounting unease over the deal raises critical questions about its future: Can China effectively block the sale, and what arsenal of legal and political tools might it deploy?

A chorus of concern: China voices its displeasure

Official channels in Beijing, amplified by state-controlled media outlets, are increasingly critical of the proposed agreement.

The Hong Kong and Macau Affairs Office has prominently featured commentaries that decry the asset sale as a betrayal of China’s national interests, particularly due to the inclusion of facilities near the crucial Panama Canal.

These concerns center on the potential for the deal to grant BlackRock substantial influence over global shipping, creating a situation where, according to state media reports, BlackRock could control 10.4% of global container throughput, possibly leading to increased expenses and supply chain vulnerabilities for Chinese companies.

Legal avenues: exploring China’s options

While the physical location of the ports outside Chinese territory seemingly limits Beijing’s direct regulatory authority, legal experts suggest potential pathways for intervention.

China’s State Administration for Market Regulation (SAMR) possesses the ability to assert what is known as extra-territorial jurisdiction under its anti-monopoly statutes.

This means that SAMR could review the sale if it believes that, even though it happens outside China, it would reduce competition in China’s domestic market.

Furthermore, authorities could invoke the Measures for Security Review of Foreign Investments, implemented in 2021.

Felix Ng, a partner at the Haldanes law firm, explained Reuters that these measures removed exclusions for foreign company acquisitions and “suggest that PRC authorities may have the power to review foreign-to-foreign transactions if the target involves PRC-related entities”.

Despite CK Hutchison being officially registered outside of China, its extensive operations within the country could provide Beijing with justification for intervention, though the company has not commented on the potential scrutiny.

Security law uncertainty: a wild card

The absence of Hong Kong regulations requiring government oversight of strategic asset sales leaves a void, filled partially by the broad reach of the 2020 National Security Law imposed by Beijing.

This law, intended to combat terrorism, subversion, secession, and collusion with foreign powers, carries heavy penalties, including potential life imprisonment.

Simon Young, a law professor at the University of Hong Kong, suggests that the law’s expansive provisions regarding “collusion” and “espionage” could be relevant.

According to Young, scrutiny under the National Security Law is possible, “Given the sensitivities…particularly over collusion or espionage.”

It must involve actions that could disrupt the policies of the Chinese or Hong Kong governments to create serious consequences.

And according to Young, espionage must involve those who are intending to endanger national security to an outside force.

The Hong Kong government has not responded to requests for comments on this matter.

Beyond direct breaches of security laws, Hong Kong officials retain considerable power to freeze assets belonging to individuals or organizations suspected of endangering national security.

Article 29, which forbids actions that disrupt laws, that are likely to cause consequences, also raises concerns.

The law applies to residents and non-residents.

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