The Securities and Exchange Board of India (SEBI), the market watchdog has notified the custodians to furnish details about the investments coming into the Indian markets from the Chinese sources. The custodians are to report the ultimate beneficiary of the FPIs (foreign portfolio investors) periodically and when they are asked to do so by SEBI.
SEBI would rarely ask for the ultimate beneficiary for investments coming in from a particular region. SEBI has sought this information on the back of the Indian Government clarifying that the regulator must inspect investments flowing from Hong Kong and China more closely.
Initially, the SEBI’s objective was to enhance inspection only on the new investments. It later decided to inspect even the existing investments that have been routed into the Indian markets via China and Hong Kong. SEBI, in a communication to the custodians, has asked for the details of foreign investors with ultimate beneficiaries being from China and Hong Kong.
The stock market indices across the world are down record levels on the back of the outbreak and spread of novel coronavirus. Also, many well-known stocks have hit their multi-year lows due to several countries being forced to go under lockdown to prevent further spread of the deadly virus, which has already taken the lives of thousands globally.
Recently HDFC Ltd had notified that People’s Bank of China (PBOC), the central bank of China, increased its holding in HDFC from 0.8% to 1.1% through open market operations. This development comes at a time when the share price of HDFC has fallen over 20% since the outbreak of coronavirus and the Chinese central bank substantially increasing its holdings in it.
Overall, there are 16 Chinese FPIs registered in India and have invested around USD 1.1 billion in the bellwether stocks. The direct and indirect investments made by the Chinese is not known. China is one of the top ten jurisdictions that invest in India. SEBI and depositories reveal only the top ten regions investing in India.
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