13 MORE FOREIGN
INSTITUTIONAL INVESTORS SIGN UP WITH SEBI
Though the domestic market has recently
been showing signs of weakness, India continues to remain
an attractive destination for foreign funds.
So far in the new year, 13 new foreign
institutional investors (FIIs) have registered with the Securities
and Exchange Board of India. Of this, 9 FIIs registered in
January and four in the first week of February. Among these
new FIIs, seven are from the US, three are from the UK and
the others are from Luxembourg, Singapore and Japan. The total
number of FIIs operating in India now stands at 531.
These new funds are entering at a time
when there are worries that FII inflows may fall on account
of Sebi's move to curb issuance of participatory notes (PN).
These funds include Singapore-based Legg
Mason Asset Management (ASIA) PTE, UK-based Lloyds TSB Group
Pension Trust, US-based Lord Abbett Series Fund, US-based
Mason Hill Asset Management, three funds of Merrill Lynch,
Tokyo-based Master Trust Bank Of Japan and Union Investment
Luxembourg. Ever since the market started moving up from the
end of April '03, the number of FIIs has increased.
The 3,000-point rally in the market has
been largely driven by the foreign funds which have poured
in over $6.5 bn in the past year. This is one of the largest
inflows by foreign funds into the country.
Despite the uncertainty over participatory
notes, FIIs have remained net investors in India. In January
'04 foreign funds have invested $697m, while in February,
FII inflows continued to be positive with a total investment
of $58m in the first week.
Interestingly, the new FIIs are registering
with Sebi at a time when the market regulator has imposed
curbs on foreign fund flows into the country through participatory
notes.
Sebi, in the middle of last month, had
directed FIIs not to issue PNs to unregulated regulated entities
from February 3 onwards. This may have contributed to heavy
selling in the market, which caused the Sensex to fall by
over 600 points as there were worries that hedge funds will
be banned from the country.
However, Sebi is now considering a move
to allow hedge funds to invest in the domestic market as a
sub-account with FIIs. The regulator is expected to come out
with a paper outlining its plans.
