Investors make two profound errors in their approach to emerging markets. First, they are entranced by GDP growth even though there is no evidence of a positive correlation between an expanding economy and stock market returns.

Chinese stocks halted an epic rally that added $3.45 trillion to shareholder wealth and witnessed the biggest fund inflows in two decades as geopolitical concerns gripped emerging markets, overshadowing euphoria over stimulus in the world’s second-biggest economy.

India's weightage in the MSCI Emerging Markets Index has reached 19.9 per cent, very close to China's weightage which has dropped down to 24.42 per cent from nearly 40 per cent in 2020.

Following the US Fed’s rate cut and China’s aggressive stimulus measures, the CSI 300 index has surged. This rally has pushed China’s weight in MSCI’s benchmark emerging market index to the level last seen in November 2023.

In just eight days, China regained the influence it lost over 10 months in emerging markets. The country’s weight in MSCI Inc.’s benchmark for EM equities climbed back to 27.8% at the end of September,