Firang millionaires find Indian market a good bet

MUMBAI: The Indian market has caught the fancy of a fresh set of investors who hold assets of nearly $30 trillion across the globe.
Foreign high networth individuals, or HNIs (those with investible funds of at least $1 million) have started shifting their assets to emerging markets like India and are believed to have pumped nearly $1 billion into the domestic markets in the past three months.
Overseas HNIs typically invest in the Indian markets through the emerging market funds of foreign institutional investors (FIIs). But now several of them have reportedly opened sub-accounts with FIIs to invest in domestic equity and debt. This trend could not, however, be verified with market regulator Sebi.
``Several overseas HNIs are keen to enter the Indian market through the Mauritius route. But since that involves legal issues, most of them have entered the Indian markets through the (FII) sub-account route. Over $924 million has come into India through FIIs in the past three months, through which HNIs have participated in the recent bull run. However, there are indications that these savvy investors are making making only short-term investments,'''' said a private sector fund manager.
A Deutche Bank asset management company official confirmed the interest of rich foreign individuals in the domestic markets and attributed it to the fact that leading investment banks like Goldman Sachs, JP Morgan and Morgan Stanley have raised the India weightage of their emerging markets portfolio. ``In the past six months, India has emerged as an attractive destination for these investors,'''' he said.
Meanwhile, a Templeton fund manager observed that foreign institutional investors are buying into Indian ADRs and GDRs with renewed vigour. This has resulted in a surge in the prices of several Indian GDRs, including SBI, VSNL and HDFC Bank, he said.
According to a recent study, jointly produced by brokerage Merrill Lynch & Co and consultant Cap Gemini Ernst & Young and covering 59 countries which account for 96 per cent of the world''s economic output, there were 7.3 million high networth individuals worldwide in 2002 holding assets worth $27.2 trillion.
Interestingly, the Asia Pacific region is turning out to be their best bet, with the value of their investments rising 10.7 per cent in 2002 (from the previous year) to $5.7 trillion. In contrast, North America was the only region that witnessed a drop in both the numbers and the wealth of high networth individuals, as exposure to falling stocks, accounting scandals and political concerns took their toll, the study noted.