FOREIGN INSTITUTIONAL INVESTORS
INVESTING MORE IN INDIAN EQUITIES
Foreign institutional investors have invested more money
in Indian equities than in Korean or Taiwanese equities.
According to data sourced from stock exchanges in Korea and
Taiwan, since January ’05, FIIs have injected just over
$1bn in Korean and $947m in Taiwanese shares. During the same
period, Indian equities received $1.1bn, reveals Securities
and Exchange Board of India (Sebi) data. The high inflow assumes
significance as Indian equities have been underperforming
since January ’05.
The Morgan Stanley Capital International (MSCI) Emerging
Markets index rose 2.5% year-to-date (YTD). In comparison,
the MSCI India index remained flat at .526%. The MSCI Korea
index rose 7% while MSCI Taiwan fell 1.9%.
At the same time, India’s weightage in the benchmark
emerging market indices, managed by agencies like MSCI and
London’s FTSE, is a fraction of Korea and Taiwan put
together. Weightages are determined by agencies based on factors
like pace of reforms, growth rate of an economy and so on.
While Korea and Taiwan together account for around 35% of
the emerging market indices, India accounts for only 6%.
As a result, Korea and Taiwan have remained the biggest recipients
of FII money. It was only in ’04 that India managed
to receive the second highest FII inflow at over $8.5bn. Brokers
say international funds are allocating more money to India
than that recommended by these benchmark indices.
