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India receives more FIIs
23 November 2010: According to Bloomberg, foreign institutional inflows (FIIs) in India were higher in 2010 so far when compared with most other Asian countries. Net inflow into India so far in 2010 stands at $28.5 billion (approx Rs 1,28,250 crore).
This is way ahead of the other Asian markets that were at the receiving end of FII largesse such as South Korea and Japan. These countries recorded FII inflows of $16 billion (approx Rs 72,000 crore) and $13 billion (approx Rs 58,500 crore) respectively.
Net inflow into Indian stocks in the same period last year stood at $15.7 billion (approx Rs 70,650 crore). FIIs appear to have been more enthused with prospects of Indian stocks this year and have recorded 80 per cent higher inflows this year.
Some of the Asian countries such as Indonesia, Japan and the Philippines also recorded higher FII inflows between 140 and 220 per cent this year.
Others such as South Korea and Taiwan, however, clocked lower inflows ranging between 28 and 50 per cent.
There does not appear to be a direct relation between foreign institutional inflows and the stock price performance in any country. The benchmark indices of India and South Korea that received the largest amount of funds have returned a modest 15 per cent so far in this calendar.
On the other hand while the Indonesian benchmark outperformed this year with 47 per cent gain, the country has received only $2.2 billion of inflow.
Similarly Thailand's benchmark has gained 39 per cent, while the inflow into the country was only $1.8 billion.
It is, however, important to take into account the fact that since the market capitalisation of Indonesia and Thailand are relatively smaller, their equity prices can be considerably affected by even such smaller inflows.
Net FII inflows as a percentage of the market capitalisation is also the highest in India at 1.8 per cent this year, followed by South Korea at 1.6 per cent.
Source: Hindu Business Line