Over 100 foreign funds eye entry into India
(Thursday, October 7, 1999)
Vivek Law in Mumbai (BS)
Foreign institutional investors (FIIs) appear to be gearing up for a major entry into the country with more than 100 FIIs having applied to open sub-accounts with HSBC?-the custodian which accounts for more than 50 per cent of the total FII investments?-in the past two months.
Highly placed sources in the custodial business of HSBC said there has been a stunning growth in the interest being shown by FIIs in the Indian markets and while it may be too early to say whether these entities would pump in huge funds into the markets, it does indicate their interest in the market.
"They could be getting ready for an impending rush. We have received more than 100 applications in the past couple of months. Most of the applications are for sub-accounts which is basically aimed at cutting down on time of processing applications by the regulatory authorities and comfort levels of regulators globally,"said a senior official at HSBC.
HSBC commands more than 50 per cent of the market share of FII investments and the value of shares in their custody may top $5 billion. The net FII inflow into the markets stands at $9.67 billion.
At present, there are about 482 FIIs registered with the Securities and Exchange Board of India (Sebi).
"Typically, a leading fund manager gets itself registered and then other funds open accounts through this fund manager. This is what seems to be happening. It appears that they want to be ready with all the regulatory approvals so that they do not miss out on any investment opportunities as and when they arise," the official said.
In fact, John Gubert, HSBC's global head of group securities services, said in the past three years he was yet to come across a single instance where the risk management wing of a fund manager had prevented the fund manager from investing in India owing to lack of adequate infrastructure.
"There has been a major change. Three years ago there were several instances where FIIs had stayed away from investing owing to poor market infrastructure and safety standards. Now they have given the green signal and we do not expect any FII to stay away from the markets owing to apprehension on the risk containment measures. Dematerialisation has been a major achievement and a cause for this sense of confidence," said Gubert. |
