InvestorQ : Why has the government expressed concerns over Chinese FPIs investments in the Indian markets?
Aditi Sharma made post

Why has the government expressed concerns over Chinese FPIs investments in the Indian markets?

Answer
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Aashna Tripathi answered.
6 months ago


SEBI has issued fresh communication to custodians seeking details of investments coming from China or via China into Indian stock markets. Custodians do periodic reporting of ultimate beneficiary of FPI but specific request for details of investments by Chinese FPIs is extremely rare.

Clearly, the government is wary about China buying up global stocks at cheap rates and its possible long term implications. The government has clarified that SEBI should increase scrutiny of investments coming from China and Hong Kong.

SEBI is focusing on new FPIs coming from China as well as existing Chinese investments. The concern stems from the fact that the sharp fall had made many bellwether stocks substantially cheaper. 

HDFC had recently announced that the People’s Bank of China (PBOC) had raised its stake in HDFC to 1.01%. With FPI limits raised to sectoral cap levels, there have been concerns that Indian companies may become targets for creeping acquisition.

Currently, there are 16 Chinese FPIs registered in India with $1.1 billion invested in top-tier stocks. However, there is no estimate of beneficial ownership.

Some of the large FPIs from China include PBOC, CIFM Asia Pacific Fund, China International, Best Investment Corp and Asian Infrastructure Investment.