The Hindu Business Line : Gulf NRIs paring exposure in Indian equities

According to Mr Vivek Mahajan, Senior Investment Advisor of Aspire Services of Dubai, which handles cumulative NRI portfolio worth around $ 500 million, Gulf NRIs have generally been sellers in the recent boom in the market.

"On the other hand, the investments from Gulf NRIs in the US stock markets have been rising, despite more than double the cost such an exercise," Mr Mahajan told Business Line from Dubai.

Market professionals felt a number of problems were behind the general apathy for the Indian stocks among NRIs there.

Popularity of flexible discount brokerage services offered by US firms such as Emiritrades ($ 7 trading) or 7 Trades or Deta Track have been successful in attracting NRI money to the US markets.

"The delay in getting clearances from the RBI for opening an NRE account, procedural hassles in clearing after the issue of a contract note and delays in getting payment are some of the irritants."

But the bigger problems are tax related issues (returns on investments in US equities are tax free). "Instances of sudden call from income-tax people for personal appearance long after opening an NRE account and occasionally trading in securities are not uncommon," he said.

However, the biggest dampener had been the dud Indian stocks, which have been dumped on the NRIs. "A large portfolio of such stocks exists in the Gulf among Indians," Mr Mahajan pointed out.

Mr Gul Teckchandani, CIO of Sun F&C, who met Gulf NRI investors several times in the recent past, said that though there is a big NRI population (around 70 per cent of 1.5 million Dubai residents alone) in the region, the investible funds or high networth individuals capable of maintaining a portfolio worth $ 2 million are few and far between.

"Comparatively, Singapore NRIs or their counterparts in Europe and North America are more equity investment worthy for a global outfit from the funds collection perspective," he felt.

The financial market in the Gulf region is at a very nascent stage. In the UAE/Dubai there are only two equity trading platforms with total listing of around 40 stocks. But initiatives are on to put in place a regulatory, statutory framework and regional equity/commodity trading platform.