As the Chinese firms making full of crashing stock markets globally with a heavy buying spree, the Securities and Exchange Board of India (SEBI) has issued a circular where the market regulator has sought details of investments coming from China or via China into Indian stock markets. As per the existing rules, a custodian periodically reports about the ultimate beneficiary of a foreign portfolio investor (FPI) or when requested by the SEBI. But as per a report by financial daily Mint, this special request by the market regulator where it has sought details of investments by Chinese FPIs or where a Chinese investor is a beneficiary is rare.
Notably, the development has come after the government said that the SEBI should increase its scrutiny of investments from Hong Kong and China. Earlier, SEBI had planned to increase scrutiny only on new FPIs coming from China and other neighbours of India but after the government's request, it will scrutinize investments too.
The communication sent to custodians read, "Urgently provide a list of FPIs whose beneficial owner is from China and list of FPIs whose beneficial owner is from Hong Kong". Equities across the global stock markets have fallen off the cliff amidst the world grappling with the COVID-19 pandemic. Now, the scrips are available at a discounted price, making it attractive for foreign as well as domestic investors.
Bank of China increased its stake in HDFC Bank
Capitalizing on cheaper prices, the People's Bank of China (PBOC) raised its stake from 0.8 percent to 1.01 percent in country's largest private sector lender HDFC Bank in March quarter. The development came under huge scrutiny by some sections who raised concern that some other stocks would also be acquired by Chinese investors. The data with SEBI shows that there are 16 Chinese Foreign Portfolio Investors (FPI) registered in India with $1.1 billion invested in top-tier stocks.
Meanwhile, the Economic Times reported that major Chinese funds having exposure to India are planning for an exit strategy from Indian stock markets amidst these investors facing backlash from countries worldwide.