Business Daily from THE HINDU group of publications
Thursday, Jun 15, 2006
Business Daily from THE HINDU group of publications Thursday, Jun 15, 2006 |
|
|
|
|
|
|
|
Markets
-
Stock Markets Jayanta Mallick
Hedge history Hedge funds considering fresh entries India-specific hedge funds estimated around 20 Hedge fund assets directed towards Asian equities at about $115 billion in 2005 Regulatory ambiguity over participatory notes another psychological block for overseas hedge funds
Kolkata , June 14 Many global hedge funds are awaiting the decision of the Indian authorities on the issue of allowing short selling. Hedge funds, which contributed to about 50 per cent of the inflow into the Indian equities in 2005, are considering fresh entries. A Singapore-based India-specific hedge fund manager told Business Line that the regulatory restriction upon institutional players over short selling in the Indian market was seen as a dampener. Though Secondary Market Advisory Committee of the Securities and Exchange Board of India (SEBI) had recommended removal of such restrictions in December 2005, a final decision is still awaited. It is reliably learnt that the International Capital Market Association, a global forum for securities firms, is also keenly watching the SEBI decision on short-selling and participatory notes in view of growing investor interest in the Indian economic growth and its equities.
India scene
There are various estimates on the number of overseas hedge funds already active in India. According to HedgeFund Intelligence, a global data bank, there are around 20 India-specific hedge funds and about 700 Asia-directed hedge funds with direct or indirect exposures in Indian stocks. MarketWatch, another global hedge fund monitor, estimates the pure India-dedicated hedge funds at 17. According to the organisers of a conference of Indian Hedge Funds Managers in Geneva on Tuesday, there has been a renewal of interest in India-only hedge funds in the recent months and the new additions put the current figure at around 50.
Hedge funds' flows
During 2003, total hedge fund assets flowing into the Indian market was about $2 billion. Since then, as the Indian benchmark surged ahead, hedge fund money poured in double quick. According to AsiaHedge, part of the HedgeFund Intelligence group of publications, hedge fund assets directed towards Asian equities almost doubled to nearly $115 billion in 2005 from about $60 billion. India (hedge) funds were continuing to clock solid growth in the early part of 2006, it said in February this year.
Participatory notes
For high-net worth individuals abroad and overseas institutions, hedge funds have become a stable option for indirect investment in India through participatory notes. Regulatory ambiguity regarding use of participatory notes is another "psychological block" for overseas hedge funds, which needs to be overcome, hedge fund industry sources say. Some analysts believe that Indian stock market has been more lucrative for hedge fund operations than that in China. A hedge fund analyst at Credit Suisse Alternative Investments had gone on record earlier that the Indian market has been gaining in depth in the past couple of years. He thought that it was also providing more shorting possibilities than that in China. Meanwhile, the current volatility in the global equities, financial and commodities markets has prompted many hedge fund managers to opt for a temporary withdrawal, particularly from the Asian (ex-Japan) markets. Two UK-based hedge funds, who were negotiating with an Indian small-cap company for picking up stakes through preferential allotment for several months, has backed out after the uncertainties set in since mid-May. "Tactically, it appears, global hedge funds have gone in for a temporary retreat", a senior official of the domestic mid-cap company said.
More Stories on : Stock Markets | Regulatory Bodies & Rulings
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2006, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|