Category — Banking & Financial Services

Mauritius Continues to Be Largest Channel for FDI to India

Based on a census that it undertook, a report by India’s central bank, the Reserve Bank of India, said, “Mauritius was the largest source of foreign direct investment (FDI) in India (21.8 percent share at market value) followed by the U.S.A., the U.K., Singapore and Japan, while Singapore (19.7 percent) was the major overseas direct investment destination (ODI), followed by the Netherlands, and the U.S.A.” The census yields comprehensive information on the market value of foreign liabilities and assets of Indian companies arising from FDI, ODI and other investments.  Historically foreign investors who expect capital gains from the ultimate sale of their stake prefer to invest via this tiny island nation due to a favored tax deal between India and Mauritius.

Reserve Bank of India logo

Other key findings of the census were:

  • Of the 18,667 companies that participated in the census, 17,020 had FDI/ ODI in their balance sheets in March 2017
  • “96 percent of the responding companies were unlisted in March 2017 and most of them had received only inward FDI; unlisted companies had a higher share of FDI equity capital compared to listed companies”
  •  Over 80 percent of the 15,169 companies that reported inward FDI were subsidiaries of foreign companies (single foreign investor holding over 50 percent of the total equity)
  • Non-financial FDI companies had a much higher share in total foreign equity participation compared to financial FDI firms.
  • “The ratio of market values of inward to outward direct investment, increased to 4.3 in March 2017 from 3.6 a year ago; equity participation accounted for 94 percent and 79 percent shares in inward and outward FDI, respectively,”
  • The manufacturing sector accounted for nearly half of the total FDI at market prices; information and communication services and financial and insurance activities were the other major sectors that attracted FDI.
  • Total sales, including exports, of foreign subsidiaries in India increased by 18.7 percent during 2016-17 whereas their purchases, including imports, increased by 20.1 percent.

January 24, 2018   No Comments

Juster: India Can Be ‘Alternative Investment Hub’ for U.S. Firms

At his first policy speech since taking over as Ambassador to India, Kenneth Juster, Washington’s envoy to New Delhi said that a number of U.S. companies have reported increasing difficulties in conducting business in the largest market in the region, China. “Accordingly, some companies are downgrading their operations there, while others are looking with great interest at alternative markets. India can seize the strategic opportunity – through trade and investment – to become an alternative hub for U.S. business in the Indo-Pacific region,” he said.

Flags of US and India

Observing that ‘America First‘ and ‘Make in India‘ are not incompatible, he added that investing in each other’s markets will be mutually beneficial. He noted that accelerating the economic and regulatory reform process already begun by Prime Minister Narendra Modi will help ensure that India is seen as an increasingly efficient, transparent and well-regulated market. “This will further promote growth and development. Continued reforms and trade liberalization will also enable Indian products to more readily become part of the global supply chain, thereby accelerating job creation,” Juster stated.

January 16, 2018   No Comments

India’s Stock Exchange Regulator Eases Rules for Foreign Investors

To ease rules for foreign investors and safeguard their interest, the Securities and Exchange Board of India announced reforms which include approval for trading of both stocks and commodities on a single exchange, and capping of cross-holdings in rating agencies as well as in mutual funds.

For foreign portfolio investors, the Board relaxed entry norms by expanding the eligible jurisdictions for registration by including all countries that have diplomatic ties with India; the regulator will also rationalize criteria and simplify the broad-based requirements for such investors.

A signborard with 'investment' written on it

The proposed norms will impact global rating agencies such as  S&P, Moody’s, and Fitch which have significant holdings in Indian rating agencies apart from their direct presence.

 

January 8, 2018   No Comments

India’s Stock Market Raises $11.6 Billion in 2017

153 initial public offering hit the Indian stock market in 2017, raising $11.6 billion according to an industry report. The report added that the market “looks good” for 2018 as well. The stability of the political landscape in India with continued focus on reform agendas by the government and significant tax reforms in the United States is likely to trigger another wave of strong growth in the capital market to enjoy a preferred position in terms of capital allocation by investors.

“The Indian IPO market in particular looks good for financial year 2018 with the return of foreign institutional investors and strong investor sentiment creating a bullish investment climate,” said Sandip Khetan, partner and national leader, Financial Accounting Advisory Services, EY India.)

Magazine with Investment Report written on it(Key highlights of the report as shared by PTI News🙂

  • 2017 saw the highest deal numbers and proceeds on record, reflecting the country’s economic strength and rising investor appetite
  • The fourth quarter of calendar year 2017 saw 22 IPOs reaching the market, an increase of 47 percent quarter-on-quarter (Q-O-Q) in terms of number of deals
  • Emerging markets contributed strongly to overall IPO performance, with both the Bombay Stock Exchange and India’s National Stock Exchange recording a 74 percent increase in deal numbers in 2017
  • The largest IPO was by General Insurance Corp of India worth $1.7 billion
  • In the Europe, Middle East, India, and Africa regions (EMEIA), the Bombay Stock Exchange and stock exchanges dedicated for trading shares of small- and medium-scale enterprises recorded the highest proceeds worth $5.5 billion through 17 IPOs
  • The top three sectors by highest number of IPOs in the EMEIA region are technology, industrial goods, and financials
  • The combination of primary market growth and overall economic growth is set to make India a highly attractive emerging market for investments in the coming months

 

December 24, 2017   No Comments

2017 Brings over $30 Billion Overseas Funds to India Stock Market

The overall net inflow of foreign  investor funds has made 2017 the best period in three years for India’s capital markets — both equity and debt — with combined net inflows of over $30 billion. Banking, housing finance, and the auto industry sectors have seen consistent foreign portfolio inflows. The higher inflow in 2017 can be attributed to the expectation of a rise in domestic economic growth, experts said.

Economy chart

As the year draws to a close, the Indian stock market seems to have regained its status as one of the most favored destinations for foreign portfolio investors, reports Business Today. However, market analysts believe that foreign portfolio flows may not continue in 2018 with the withdrawal of liquidity and rate hikes in developed economies picking up. Additionally, the inflation cycle is likely to turn following an increase in commodity prices and a recovery in consumption demand.

Dinesh Rohira, founder and chief executive at 5nance.com said that business sentiment among companies has improved because of India’s ‘ease of doing business’.  The government’s commitment in speeding up development and economic reforms before going for elections in 2019 bodes well for foreign investors’ confidence, he added. The government’s decision to recapitalize state-owned banks is also expected to enhance lending and propel economic growth.

December 22, 2017   No Comments