Stocks Rally as PM Modi Emphasizes Need to ‘Restore’ Ties with China on Lex Fridman Podcast
Shares of several Indian companies with exposure to China rallied on March 17 after Prime Minister Narendra Modi spoke about restoring relations with China during an interview on the Lex Fridman Podcast. The market responded positively to the comments, as investors interpreted them as a potential easing of geopolitical tensions that have affected trade and investments between the two nations.
PM Modi’s remarks come nearly five years after the India-China military standoff along the Line of Actual Control (LAC) in Ladakh in 2020. He acknowledged that while differences between neighbors are natural, the two nations must ensure that such issues do not escalate into long-term disputes.
Following the Prime Minister’s comments, shares of companies with Chinese partnerships and supply chain dependencies saw an upward movement, reflecting optimism in the market regarding future trade and business prospects.
Electronics and Auto Component Stocks See Strong Gains
Kaynes Technology and Syrma SGS Lead Gains in Electronics Sector
- Kaynes Technology, a leading electronics manufacturing services (EMS) provider, rose nearly 2% to ₹4,310 per share. The company imports a significant portion of its electronic components from China and other Asian markets.
- Syrma SGS Technology, another EMS firm, also saw its stock price increase by nearly 2% to ₹420 per share. The company’s reliance on imported semiconductors and PCB components from China contributed to the market sentiment around easing trade relations.
UNO Minda, Minda Corp Rally as Auto Suppliers Bet on China Ties
- UNO Minda, a major automotive components manufacturer, saw its stock surge over 4% to ₹941.15. The rally was fueled by its partnership with China’s Inovance Automotive, announced in June 2024, to expand its electric four-wheeler (E4W) product portfolio. The company had also expressed interest in converting the partnership into a joint venture, subject to regulatory approvals.
- Minda Corporation, the flagship company of the Spark Minda Group, gained nearly 2%, trading at ₹527 per share. Minda Corp had signed a technology licensing agreement with China’s Sanco Connecting Technology in September 2024 to locally develop EV charging solutions, power distribution units (PDUs), and battery distribution units (BDUs).
Amara Raja Energy & Mobility Gains on Lithium-Ion Battery Venture
- Amara Raja Energy & Mobility, a leading battery manufacturer, rose over 1% to ₹976 per share. The company had partnered with China-based Gotion High-Tech in June 2024 to develop lithium-ion battery technology in India, aimed at accelerating the country’s EV transition.
Chemical Stocks Also See Positive Momentum
The optimism extended to chemical manufacturers, particularly those with exposure to China.
- PI Industries, Neogen Chemicals, SRF, and Navin Fluorine all saw their stocks rise over 1%, as improved relations could benefit raw material imports from China, which plays a dominant role in global chemical supply chains.
PM Modi on India-China Relations: “Trust and Cooperation Will Return”
Speaking on the Lex Fridman Podcast, PM Modi emphasized the historical ties between India and China, acknowledging that both civilizations have shared knowledge and trade for centuries.
“The relationship between India and China isn’t something new. Both nations have ancient cultures and civilizations. Even in the modern world, they play a significant role. If you look at historical records, for centuries, India and China have learned from each other. Together, they have always contributed to the global good in some way,” PM Modi said.
“Differences Are Natural, but Must Not Become Disputes”
Addressing the border tensions following the 2020 Galwan Valley clashes, Modi highlighted the need to move forward constructively.
“Our relationship should remain just as strong in the future. It should continue to grow. Of course, differences are natural. When two neighboring countries exist, occasional disagreements are bound to happen. Even within a family, not everything is always perfect. But our focus is to ensure that these differences don’t turn into disputes,” he said.
“Restoring Ties Will Take Time, But It’s Essential for Global Stability”
Modi acknowledged that while rebuilding trust after five years of tension will be gradual, it is necessary for regional and global stability.
“We are now working to restore conditions to how they were before 2020. Slowly but surely, trust, enthusiasm, and energy will return. But of course, it will take some time, since there’s been a five-year gap. Our cooperation isn’t just beneficial, it’s also essential for global stability and prosperity,” Modi stated.
“21st Century Belongs to Asia – India and China Must Compete, Not Conflict”
PM Modi stressed that the 21st century belongs to Asia, and India and China must engage in healthy economic competition rather than conflict.
“Since the 21st century is Asia’s century, we want India and China to compete in a healthy and natural way. Competition is not a bad thing, but it should never turn into conflict,” he emphasized.
Market Experts See Potential Upside for India-China Trade-Linked Stocks
Analysts believe that improved diplomatic ties with China could benefit Indian businesses that depend on Chinese supply chains, imports, and joint ventures.
- Stock market strategists pointed out that easing tensions could lead to smoother trade relations, lower supply chain disruptions, and better pricing for imported raw materials.
- Investors are optimistic that sectors such as electronics, automotive components, chemicals, and battery manufacturing could see renewed business momentum if India and China re-engage in trade dialogues and economic cooperation.
As diplomatic discussions progress, investors will be closely watching for further policy announcements that could provide clarity on the future of India-China business relations.
