JPMorgan Eyes India as One of the Fastest-Growing Markets in Asia-Pacific

According to a high-ranking official at JPMorgan, India has the potential to become one of the top three fastest-growing markets for the bank in the Asia-Pacific region next year, alongside Australia and Japan. Filippo Gori, JPMorgan’s CEO for Asia Pacific, expressed optimism about India’s prospects during an interview with Reuters in Mumbai. He highlighted the growing enthusiasm for the “China plus one” strategy among businesses, suggesting that India could emerge as the primary beneficiary of this approach. This strategy involves companies diversifying their supply chains beyond China to establish more resilient and geographically dispersed operations.

This is because India, with its vast scale and a growing middle class, has the potential to absorb a significant portion of the supply chain that many companies around the world are looking to relocate. As global corporations like Apple Inc. have stepped up production in India, and others like Tesla are in discussions to begin manufacturing in the country, India’s importance in global supply chains has been on the rise.

India’s economy, the third-largest in Asia, is expected to grow at a rate of 6.5% in the financial year ending March 31, 2024. This makes it the fastest-growing major economy globally, and it’s actively working to attract global corporations through various initiatives, including tax incentives and regulatory reforms.

Gori observed that one missing element in India appears to be a more structured infrastructure, which currently exhibits greater fragmentation and less uniformity compared to China. He envisions low-end manufacturing shifting out of China but believes high-end manufacturing may take more time to relocate due to certain infrastructural challenges.

Despite some headwinds, the deal volume for JPMorgan across mergers and acquisitions, equity, and debt fundraising has been relatively weak across the Asia-Pacific region this year. India has been no exception to this trend. However, Gori pointed out that while deal volumes have been subdued, the level of inquiries and activity in India is picking up significantly.

In response to the growing potential in India, JPMorgan has expanded its investment banking team in the country by adding two senior managing directors in the last 12 months. Additionally, the bank has strengthened its commercial banking division, which focuses on mid-sized companies, over the past five years. Alongside this, JPMorgan has grown its corporate center business, responsible for offshoring-related work, increasing its workforce from 35,000 in 2018 to 50,000 today.

When asked about the impact of China’s economic slowdown and the turbulence in its markets, Gori highlighted that JPMorgan hasn’t witnessed a sharp slowdown in business volumes in the Chinese market yet. He emphasized the importance of distinguishing between headlines and day-to-day business operations, as China has displayed exceptional resilience in certain sectors.

JPMorgan’s primary client base in China consists of international companies operating offshore in the country. This particular business segment hasn’t been significantly impacted by geopolitical events. Gori suggested that, given China’s ongoing economic restructuring, there could even be potential dealmaking activity emerging from the country.

In conclusion, JPMorgan sees India as a promising market with substantial growth potential, driven by factors such as its large consumer base, increasing manufacturing activity, and ongoing economic reforms. The bank’s commitment to expanding its presence in India reflects its confidence in the country’s long-term prospects, despite near-term challenges in the broader Asia-Pacific region.