Swiss Funds Take To Local Stocks

Until now, Swiss investments in India were in the fields of food processing, machinery and banking sector.

But now, the Indian stock market has caught the fancy of private and pension funds in Switzerland. Pictet Country Fund $ 169 million, the asset management company through its sub-funds Indiaval and IFC India as well as other Swiss funds have invested a total $ 1.5 billion in the stock markets in India.

The stocks which has attracted Pictet Country Fund are Infosys, Pentafour Software, Himachal Futuristic, Zee Telefilms, Polaris, Reliance Industries, Global Tele-Systems, Kale Consultants, Larsen & Toubro and NIIT.

The fund has invested highest in technology related stock which account to 48.2 per cent.

 

van Pictet, partner of Pictet & Co, Private Bankers said that the fund has also invested in other sectors such as cement and petroleum. In sectors other than technology, Indiaval, the sub-fund has investment is single digit percentage such as industrial 8.4 per cent, chemical 6.7 per cent, petroleum 5.8 per cent, pharmaceuticals 4.9 per cent, cement 5.1 per cent and finance 2.3 per cent.

On the Indian stock market, Pictet said, "there is a big potential in the Indian stock market which has a market capitalisation of $200 billion. However, investments are not upto the mark as there are lot of restrictions. I think investments may start pouring in with stability of rupee, easy exist routes for the companies, changes in taxes and market liquidity."

Pictet also pointed out that the pensions funds are expected to pay premium for a stock "which is not allowed". "For the ageing population, it is high risk investing into securities in the emerging markets such as India and China," he added.

In its risk factors to its shareholders, the Indiaval fund points out that "shareholders should recognise that investing in emerging markets is intended for sophisticated investors and involves certain special considerations. The sub-fund may be affected favourably or unfavourably by changes in currency rates and in exchange control regulations."

Moreover, it warns investors that securities in emerging markets tend to be less liquid and more volatile than those in the major markets.

In its market comments, the fund has this to say, "we also hold on to positions in selected cyclicals, as liberalisation of the oil industry unfolds and as the improving economy boosts aluminum, automobiles and cement over the coming months".