HONG KONG, Oct 27 (Reuters) – Global hedge funds are moving to set up shop in India, a market long shunned by international investors, attracted by its growing depth and liquidity and investment in China. Attracted by its emergence as an alternative to. ,Thank you for reading this post, don't forget to subscribe!
Singapore-based multi-strategy hedge funds Diamon Asia Capital and Citadel Securities are among the funds and securities brokers that are entering a market in which they had small investments in the past, through tax issues and short-selling. Were concerned about their ability to hedge investments.
Dimon, which currently manages about $2 billion in assets, is applying for an investment advisor license and opening an office in Mumbai.
“Traditionally, the main drivers of performance for our equities business have been Greater China and Japan,” said Mark Wong, co-CEO of Dimon.
“But over the last 12 to 24 months, India has become a significant contributor to the overall portfolio in terms of returns and risk appetite.”
Some funds highlight India’s economic opportunity, rich pool of local talent and stable regulatory environment, while the surge in trading volumes has also made it easier to hedge positions or pursue specific long-short equity strategies.
India’s stock market valuation has doubled in just three years to reach $3.8 trillion in September, and that depth is enabling it to take China’s place in global portfolios as investors flee mainland markets.
Prashant Kothari, senior investment manager at Pictet Asset Management, explains how Indian equities have received nearly $6 billion of foreign inflows so far this year, representing more than half of the total net inflows into global equities.
He said sectors like energy, defence, technology and pharmaceuticals will continue to benefit.
Sachin Kewalramani, portfolio manager and head of Asia fundamental equities at hedge fund Citadel, said the company is looking to hire more investment professionals and engineers from India for its international equities team.
“All ingredients are present in the market to attract substantial investment,” he said.
Citadel Securities, Citadel’s market-making arm, is also expanding rapidly in India, and has a local team of 10 in Gurugram, where it opened last year.
Quants and Stock-Pickers
Apart from stock pickers, funds with quantitative strategies are also coming to India.
Gao Capital, a multi-strategy hedge fund based in Singapore with about $100 million under management, is setting up the four-year-old local private equity strategy as well as the infrastructure for derivatives trading in the market.
“There has been a tremendous increase in volumes since COVID, so it has become a situation where there is enough volume to support market neutral quantitative trading, which we see a real opportunity,” said Chaowei Yak, CEO of Gao. “
Yaak said they were in the process of opening an office in Bengaluru under the supervision of an Indian-origin co-founder.
Large global quant funds, such as New York-headquartered Tower Research and Amsterdam-headquartered Optiver, are also expanding in India, according to industry sources familiar with the matter and LinkedIn job advertisements.
“We are excited by the business opportunities in India, the long-term potential of the market and economy, the tremendous source of talent and the stable governance and regulatory environment,” an Optiver spokesperson said.
The tower did not respond to Reuters’ questions.
Dimon’s Wong said the new office in Mumbai will make it easier for analysts to be closer to the companies they cover. Yet he also said it is still “not easy to transport” in India due to regulatory requirements, taxation and liquidity challenges.
Those challenges remain a hurdle for some funds.
“There have been a lot of changes in India over the last few years as far as tax changes and shorting rules go, this was not something we were very comfortable with,” said Patrick Ghaly, managing partner at hedge fund advisory firm Sussex Partners. Felt comfortable.” ,
Very few managers across Asia have made money in India, Ghaly said. “Yet they are still holding on because of the idea that this is a growing market and economy.”
Reporting by Xie Yu and Summer Jane in Hong Kong, Editing by Vidya Ranganathan and Lincoln Feast
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