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Wait before you invest in foreign stocks: The Times of India
New Delhi, Jan 19: So, you thought buying a few shares in the Microsofts of this world was now easy. Well, think again.
New Delhi, Jan 19: So, you thought buying a few shares in the Microsofts of this world was now easy. Well, think again.
Wait before you invest in foreign stocks
ADITYA CHATTERJEE
TIMES NEWS NETWORK[ SATURDAY, JANUARY 18, 2003 02:12:09 PM ] NEW DELHI: So, you thought buying a few shares in the Microsofts of this world was now easy. Well, think again.
There's some bad news for those of you, who were gung-ho about investing in foreign companies after the recent government announcement to this effect. For starters, the government is yet to come up with its detailed do's and don'ts, and it is unlikely to be an simple task. Says C Jayaram, executive director, Kotak Mahindra: "There are too many grey areas in this issue. I don't know, for example, whether it's okay to invest in a foreign company, which indirectly holds a 10 per cent stake in an Indian company through a subsidiary." "Or, what happens if a foreign company--where I'm investing--does not subscribe to an IPO of its Indian subsidiary and its stake subsequently falls below the prescribed 10 per cent limit? Am I then required to disinvest?" he asks. Jayaram is not the only investment banker/fund manager/broker who is complaining; each and every top manager at Dalal Street shares his concerns.
K Vijayan, CEO, JM Mutual says: "No body here seems to know the exact process. Can a resident Indian now access portals like e-trade, open an account and actually execute a trade with the help of his credit card? Will it be mandatory to route trades through local brokers, or can we directly contact foreign brokerages?"
As far as the small investor is concerned, mutual funds will remain their best bet for foreign flavours due to the high cost of both transactions and securities. But, even here, the size of the corpus seems to be paramount. "Mutual fund schemes below a corpus of $250 million (or Rs 1,200 crore) do not make commercial sense abroad. But, can we raise so much money locally for a scheme with no track-record?" asks U R Bhat, chief investment officer, Jardine Fleming.
"I wonder whether this government move will offer the best investment avenues for the common investor. The babus would have done better if investments with a cap of around $25,000 were allowed in widely held global mutual funds. That would have given local investors a real opportunity to invest in global stocks", Bhat added.
Nikhil Khattau, CEO, Sun F&C Mutual Fund, says he sees no reason to buy into US and European companies at this point in time. "The US markets are being propped up by the high property prices, while Europe is slowing down. India, in comparison, is doing very well and is coming across as an attractive investment destination."
Alok Churiwala, a broker from the Bombay Stock Exchange, offers yet another view on global investments. "I would rather buy stocks in India, than go shopping abroad. An Infosys here gives me a better valuation than a Microsoft in the US. Let's also face facts... frankly, we don't have fund management insights about foreign markets, and foreign consultancy comes at a price."
Clearly, the world may not be enough when it comes to Indian aspirations, but global markets are still a bridge too far for hopeful investors.
TIMES NEWS NETWORK[ SATURDAY, JANUARY 18, 2003 02:12:09 PM ] NEW DELHI: So, you thought buying a few shares in the Microsofts of this world was now easy. Well, think again.
There's some bad news for those of you, who were gung-ho about investing in foreign companies after the recent government announcement to this effect. For starters, the government is yet to come up with its detailed do's and don'ts, and it is unlikely to be an simple task. Says C Jayaram, executive director, Kotak Mahindra: "There are too many grey areas in this issue. I don't know, for example, whether it's okay to invest in a foreign company, which indirectly holds a 10 per cent stake in an Indian company through a subsidiary." "Or, what happens if a foreign company--where I'm investing--does not subscribe to an IPO of its Indian subsidiary and its stake subsequently falls below the prescribed 10 per cent limit? Am I then required to disinvest?" he asks. Jayaram is not the only investment banker/fund manager/broker who is complaining; each and every top manager at Dalal Street shares his concerns.
K Vijayan, CEO, JM Mutual says: "No body here seems to know the exact process. Can a resident Indian now access portals like e-trade, open an account and actually execute a trade with the help of his credit card? Will it be mandatory to route trades through local brokers, or can we directly contact foreign brokerages?"
As far as the small investor is concerned, mutual funds will remain their best bet for foreign flavours due to the high cost of both transactions and securities. But, even here, the size of the corpus seems to be paramount. "Mutual fund schemes below a corpus of $250 million (or Rs 1,200 crore) do not make commercial sense abroad. But, can we raise so much money locally for a scheme with no track-record?" asks U R Bhat, chief investment officer, Jardine Fleming.
"I wonder whether this government move will offer the best investment avenues for the common investor. The babus would have done better if investments with a cap of around $25,000 were allowed in widely held global mutual funds. That would have given local investors a real opportunity to invest in global stocks", Bhat added.
Nikhil Khattau, CEO, Sun F&C Mutual Fund, says he sees no reason to buy into US and European companies at this point in time. "The US markets are being propped up by the high property prices, while Europe is slowing down. India, in comparison, is doing very well and is coming across as an attractive investment destination."
Alok Churiwala, a broker from the Bombay Stock Exchange, offers yet another view on global investments. "I would rather buy stocks in India, than go shopping abroad. An Infosys here gives me a better valuation than a Microsoft in the US. Let's also face facts... frankly, we don't have fund management insights about foreign markets, and foreign consultancy comes at a price."
Clearly, the world may not be enough when it comes to Indian aspirations, but global markets are still a bridge too far for hopeful investors.