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India Equity Research Reports, IPO and Stock News
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Our analysis of exports from India and FII inflows into India in FY2011 shows wide gaps between reported official and bottom-up data. We attribute this to data limitations partly but highlight that a better understanding of the nature and type of exports and foreign inflows is critical (1) to fully appreciate the drivers of exports and implications for BOP, reserves and exchange rate and (2) to mitigate risks to the India economy from illicit ‘foreign’ flows, if any.
Difficult to explain surge in exports of engineering goods in FY2011 and the few prior years
Our study of exports data of major engineering companies (including automobiles and metals) shows that the increase in their exports does not reconcile with the steep increase in official exports data. In fact, the gap is quite substantial. Reported exports of engineering goods as per official data jumped 79% yoy (US$30 bn) to US$68 bn in FY2011. On the other hand, exports of the ‘engineering’ companies in the BSE-500 Index increased 11% yoy to Rs638 bn in FY2011 from Rs577 bn in FY2010. Our observation holds true for the past few years too.
Difficult to explain surge in FII inflows in FY2011
Our bottom-up study of flows of FII funds and ETFs does not reconcile with the reported US$22 bn of FII inflows in FY2011. At best, we can account for US$4.5 bn of FII flows based on data of listed FIIs, ETFs and estimates of EPFR Global. We admit that EPFR Global data does not capture all the sources of foreign institutional investment (sovereign and private equity funds, for example) that can invest in India. Nonetheless, the difference is stark.
A few examples of remarkable growth in exports; hard to reconcile with publicly available dataA study of official exports data shows remarkable growth in two areas in the broad category of engineering goods—(1) metal and metal products and (2) transport equipment. Exports of copper cathodes grew 444% to Rs317 bn in FY2011 and was the key driver of US$17 bn growth in exports in metal products. Similarly, a huge jump in exports of cars, drilling rigs and unclassified ships accounted for the major portion of the US$9 bn increase in exports of transport equipment. We didn’t see the same growth in exports of large listed companies.
Looking for credible explanations; better and more disclosures imperative
The gap between the surge in exports as per official data and a more muted performance of the listed entities would suggest that (1) exports are largely being driven by smaller listed players or unlisted entities or (2) the quality of data is suspect. We would like to believe credible explanations exist for the aforementioned gaps with respect to (1) exports from India and (2) FII inflows into India.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Our analysis of exports from India and FII inflows into India in FY2011 shows wide gaps between reported official and bottom-up data. We attribute this to data limitations partly but highlight that a better understanding of the nature and type of exports and foreign inflows is critical (1) to fully appreciate the drivers of exports and implications for BOP, reserves and exchange rate and (2) to mitigate risks to the India economy from illicit ‘foreign’ flows, if any.
Difficult to explain surge in exports of engineering goods in FY2011 and the few prior years
Our study of exports data of major engineering companies (including automobiles and metals) shows that the increase in their exports does not reconcile with the steep increase in official exports data. In fact, the gap is quite substantial. Reported exports of engineering goods as per official data jumped 79% yoy (US$30 bn) to US$68 bn in FY2011. On the other hand, exports of the ‘engineering’ companies in the BSE-500 Index increased 11% yoy to Rs638 bn in FY2011 from Rs577 bn in FY2010. Our observation holds true for the past few years too.
Difficult to explain surge in FII inflows in FY2011
Our bottom-up study of flows of FII funds and ETFs does not reconcile with the reported US$22 bn of FII inflows in FY2011. At best, we can account for US$4.5 bn of FII flows based on data of listed FIIs, ETFs and estimates of EPFR Global. We admit that EPFR Global data does not capture all the sources of foreign institutional investment (sovereign and private equity funds, for example) that can invest in India. Nonetheless, the difference is stark.
A few examples of remarkable growth in exports; hard to reconcile with publicly available dataA study of official exports data shows remarkable growth in two areas in the broad category of engineering goods—(1) metal and metal products and (2) transport equipment. Exports of copper cathodes grew 444% to Rs317 bn in FY2011 and was the key driver of US$17 bn growth in exports in metal products. Similarly, a huge jump in exports of cars, drilling rigs and unclassified ships accounted for the major portion of the US$9 bn increase in exports of transport equipment. We didn’t see the same growth in exports of large listed companies.
Looking for credible explanations; better and more disclosures imperative
The gap between the surge in exports as per official data and a more muted performance of the listed entities would suggest that (1) exports are largely being driven by smaller listed players or unlisted entities or (2) the quality of data is suspect. We would like to believe credible explanations exist for the aforementioned gaps with respect to (1) exports from India and (2) FII inflows into India.
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