Stock brokers look to set up shop overseas to tap rising interest from NRIs

Setting up offices in off-shore destinations, dedicated teams to talk to investors in their time zones

Brokers are looking to set up shop abroad to tap non-resident Indians (NRIs). Assets under custody of NRIs are up 147.1 per cent since 2013-14. They accounted for Rs 1,318 crore as of 2013-14, rising to Rs 3,257 crore as of November 2018, the latest month for which figures are available with the Securities and Exchange Board of India (Sebi).
 
A fall in the local currency, a better perception of local fundamentals coupled with developed market issues have contributed to an increasing number of NRIs looking to invest in India.
 
“We now have the approvals and recently set up an office in Singapore. We have had a presence in Hong Kong and are now exploring options for a presence in West Asia. Offices are being set up to cater to NRIs and other offshore investors who wish to participate in the India opportunity across asset classes. It is also to cater to India-based clients who may wish to have some diversification abroad,” said Arpita Vinay, executive director at Centrum Wealth Management.
 
A number of clients in Africa invest through jurisdictions such as Dubai for their global investments, according to Arpita Vinay.
 
“Given the vast NRI population and huge amount of remittances coming to India from the Gulf Cooperation Council (GCC), we are focusing on the GCC right now,” said Dharmesh C Desai, senior vice-president, IIFL Securities.
 
He added there was a team in India to interact with NRIs in regions including West Asia and Europe.
 
“NRI interest has gone up in the past three-four years,” said Ashish Shanker, executive vice-president and head-investments at Motilal Oswal Wealth Management.
 
Favourable currency movements, stabilising macro-economic parameters and the tempering of the rally in the US and the challenges emerging for China have made the Indian markets look more attractive, said Arpita Vinay.
 
The currency has fallen from Rs 59.89 against the dollar at the end of 2013-14 to Rs 71.19 on Friday.
 

The Dow Jones Industrial Average, an indicator of how well the American markets are doing, saw an 18.8 per cent correction from its October 3 high of 26,828.4 to 21,792.2 by December 24, 2018. It had recovered and was trading above 24,000 on January 18.
 
The World Bank in a recent statement noted India accounted for one of the world’s biggest flows of remittances. The current NRI assets under custody are less than $500 million. This is a fraction of the World Bank’s remittances figure of $80 billion a year for India. The second was China ($67 billion), and Mexico and the Philippines, which accounted for $34 billion each, came third.
 
Growth is expected to continue, though at a more moderate pace. 
 
“As global growth is projected to moderate, remittances to low- and middle-income countries are expected to grow moderately by 4 per cent to reach $549 billion in 2019. Global remittances are expected to grow 3.7 per cent to $715 billion in 2019,” said the World Bank statement.
 
This is also seen in the latest figures, where growth in NRI assets has come down from what they were five years ago.