True, comparisons between India and China can often get tiresome and pointless. But it can also be a revealing exercise every now and then.
Take a look at how the Indian and Chinese stock markets have performed since the start of 2009. India is down 15.02% since 1 January, making it one of the worst performing Asian markets this year. Only Vietnam, Japan and Hong Kong have done worse. The other regional markets have posted more modest declines.
China has been a stunning exception. The Shanghai Composite Index is up 21.98% in the year to date.
Why? It’s hard to tell. The Chinese stock market is often a riddle wrapped in a mystery inside an enigma. But such outperformance does call for tentative explanations.
One likely reason is that China’s fiscal stimulus packages and its moves to boost bank lending are paying dividends. But China’s economy is too dependent on exports to the US for it to suddenly decouple. So, there is a second possibility: China is blowing a new bubble just as the US did in 2002.