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India Equity Research Reports, IPO and Stock News
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ETF – not a flow driver
Global ETFs have turned net sellers of Indian equities during CY11 and
sold US$462m worth of Indian stocks, as against overall secondary
market FII inflow of US$680m. Global ETFs now account for 6% of all FII
assets in India – a steady trend over the last 9 months. Interesting to
note, however, is that iShares Emerging market fund (5th largest ETF
globally) has started buying local shares as against only ADR/GDR earlier
and has pumped in US$550m in local shares over the last 3 months, even
as the mother fund sees outflows. If this trend continues, expect ADR
premiums to shrink further.
ETFs have been net sellers YTD
q During CY09 and CY10, the period during ETFs were dominant force in the Indian
stock market and accounted for 34% and 17% of overall secondary market FII
flows in India
q During CY11 YTD, ETFs have turned net sellers of US$462m as against overall FII
net buying of US$680m in the secondary market (up to August 31st, 2011)
q India dedicated ETFs saw large outflows of US$1.3bn (May, June and August saw
large outflows), partially offset by inflows from multi country ETFs.
ETF’s account for 6% of FII holdings in India
q ETFs now account for 6.3% of total FII investments in India as at June 30th.
q This proportion has remained largely flat over the last 9-12 months after the initial
surge over CY08-10 period
q India dedicated ETFs account for nearly 2/3rd of the total investment
The ‘biggie’ has started buying local shares
q iShares Emerging Market Index fund (EEM US), the fifth largest equity ETF globally
(AUM US$38bn), has traditionally allocated its India portion only in ADR/GDRs.
q This is now changing. EEM US has started buying local shares and local shares now
account for 21% of its India holdings, from 0% three months ago
q As at July 31st, EEM US had US$549m worth of investment in local shares and
US$2.6bn in ADR / GDR.
Expect ADR premiums to shrink further
q EEM US has see large outflows during CY11 YTD of US$8bn, which we believe is
one the reasons why the ADR premium of Indian stocks has reduced over the last
12-months
q If the outflows continue and/or EEM US starts shifting its portfolio to local shares,
expect more shrinkage to ADR premiums. Wipro ADR and HDFC Bank ADR would be
most vulnerable.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ETF – not a flow driver
Global ETFs have turned net sellers of Indian equities during CY11 and
sold US$462m worth of Indian stocks, as against overall secondary
market FII inflow of US$680m. Global ETFs now account for 6% of all FII
assets in India – a steady trend over the last 9 months. Interesting to
note, however, is that iShares Emerging market fund (5th largest ETF
globally) has started buying local shares as against only ADR/GDR earlier
and has pumped in US$550m in local shares over the last 3 months, even
as the mother fund sees outflows. If this trend continues, expect ADR
premiums to shrink further.
ETFs have been net sellers YTD
q During CY09 and CY10, the period during ETFs were dominant force in the Indian
stock market and accounted for 34% and 17% of overall secondary market FII
flows in India
q During CY11 YTD, ETFs have turned net sellers of US$462m as against overall FII
net buying of US$680m in the secondary market (up to August 31st, 2011)
q India dedicated ETFs saw large outflows of US$1.3bn (May, June and August saw
large outflows), partially offset by inflows from multi country ETFs.
ETF’s account for 6% of FII holdings in India
q ETFs now account for 6.3% of total FII investments in India as at June 30th.
q This proportion has remained largely flat over the last 9-12 months after the initial
surge over CY08-10 period
q India dedicated ETFs account for nearly 2/3rd of the total investment
The ‘biggie’ has started buying local shares
q iShares Emerging Market Index fund (EEM US), the fifth largest equity ETF globally
(AUM US$38bn), has traditionally allocated its India portion only in ADR/GDRs.
q This is now changing. EEM US has started buying local shares and local shares now
account for 21% of its India holdings, from 0% three months ago
q As at July 31st, EEM US had US$549m worth of investment in local shares and
US$2.6bn in ADR / GDR.
Expect ADR premiums to shrink further
q EEM US has see large outflows during CY11 YTD of US$8bn, which we believe is
one the reasons why the ADR premium of Indian stocks has reduced over the last
12-months
q If the outflows continue and/or EEM US starts shifting its portfolio to local shares,
expect more shrinkage to ADR premiums. Wipro ADR and HDFC Bank ADR would be
most vulnerable.
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