Fiis May Favour Psu Scrips In The Long Term: Hsbc Dy Chief

Foreign investors will be more interested in the public sector units (PSU) privatisation programme than the domestic equities market in the medium and long term, said HSBC Investment Banking deputy chairman Paul Selway-Swift.

Swift was in New Delhi to announce the setting up of HSBC Capital Markets Pvt Ltd.

The new company has obtained approval of the Foreign Investment Promotion Board for an equity capital of $20 million, making it one of the largest dedicated merchant banking company in the country.

HSBC Investment Banking also controls HSBC Batlivala & Karani (Holdings) Pvt Ltd, a stock broking firm, and HSBC Private Equity Management Mauritius Ltd.

 

HSBC Capital Markets will focus on equity, debt, financial advisory services for mergers and acquisitions and project finance, chief executive officer Shaun Browne, said.

HSBC is a leading global banking and financial services organistaion with a turnover of $402 billion in 1996.

In India the company offers stockbroking, merchant banking and fund management services.

Foreign investor perception of India is mixed at the moment. The Bombay Stock Exchange sensitive index is not at an all time high as compared to other markets the world over. This shows that there is some doubt in the mind of foreign investors," Swift said.

He, however, qualified his remarks saying: The success of issues such as the recent Videsh Sanchar Nigam Ltd (VSNL) global offering shows that there is definite interest in the market."

On the foreign institutional investors additional inflows into the country owing to a sluggish overseas markets, he said: "The question is whether this is the right time or not. There is a degree of caution in the minds of investors.

He added that, in the long term most foreign institutional investors are positive". Swift was of the opinion that at present South American countries, and not China, were attracting the attention of foreign investors.

On whether the public sector undertaking divestment programme was proceeding at a satisfactory pace, Christopher

A Clarke, director, corporate finance, said "there have been significant changes, especially after the setting up of the Disinvestment Commission. The commission, however, can only make recommendations. Then it is up to the central government or cabinet to act upon them.

On the high populate of the public sector undertaking privatisation among foreign institutional investors, he said: The domestic equity market had earlier attracted a lot of interest. But it moved too far too fast.

He further added,When that happens you get indigestion. And emphasis tends to shift over a period of time.

The public sector undertakings have come into the limelight because of the divestment programme, and because they offer greater liquidity in trading."