Overseas investors chasing higher returns can’t ignore India’s stocks as its economy ranks among the world’s strongest and bears the fruit of government-led reforms, according to Manulife Asset Management.

“As China faces uncertainty after the trade war, money now needs to find a market which is large and growing, and India is among them,” Rana Gupta, managing director of Indian equities at Manulife Asset Management Singapore Pte., said in an interview in Mumbai. “India’s adding a few trillion dollars to the economy and that’s how it obviously generates interest.”

Foreign investors have pumped more than $11 billion into Indian equities this year on bets there will be political stability and more room for a majority government to push for economic reform. In addition, Indian stocks will become relatively more attractive as China’s economy suffers from its ongoing trade war with the U.S.

Amid uncertainty about global economic growth, investors are looking for markets that are driven by domestic demand, have room for lower interest rates, and are under a stable government that doesn’t indulge in populist spending, Gupta said. “Fortunately, India ticks all the four boxes and looks quite good as an investment opportunity,” he said.

About 29% of Gupta’s $257 million Manulife India Equity Fund has holdings in banks and financial companies. It has returned 12% annually over the past three years, beating 87% of its rivals, according to data compiled by Bloomberg.

Among financial shares, Manulife is betting mainly on non-state banks and insurance companies on the view they will benefit from an increasingly formal economy and the growing number of Indians parking their savings into financial instruments.

Manulife is also eyeing businesses that stand to benefit from government measures on affordable housing. It is also interested in companies that produce white goods, ceramics and paint. Chemical and light engineering businesses are also attractive, as they may gain from China’s economic shift to consumption from manufacturing, Gupta said.

Manulife Financial Corp.., which manages more than $1 trillion of assets globally, oversees about $500 million of Indian equities. On June 21, it signed a venture with India’s Mahindra Asset Management Co. to invest $35 million for a 49% stake.

Bloomberg News.