Foreign investments

Foreign investment: Indians invest record amounts in global debt, stocks and bank deposits

Resident Indians have invested in assets abroad for a record amount since the central bank led the way through the Liberalized Discount System (LRS).

Indians have invested $ 1.53 billion in debt, stocks and bank deposits through the LRS since the pandemic-induced lockdown in March 2020, the highest since 2004-05 when the window was introduced, data on outgoing remittances released by the central bank.

Investment advisers say this trend could accelerate with brokerage firms such as ICICI Direct and HDFC Securities facilitating direct investment, and mutual funds offering programs that buy foreign stocks such as Facebook, Alphabet (Google ) or Amazon.

“A combination of factors sparked the interest of Resident Indians in investing in global securities during the pandemic,” said Vijay Chandok, managing director of ICICI Securities. “While the diversification of assets prompted them to look overseas, the history of the growth of new age companies has also been an asset. , Facebook or Amazon.

Under the LRS, all residents, including minors, are allowed to freely pay up to $ 250,000 per fiscal year (April to March) for any authorized transaction on a current or capital account or a combination of the two. These include capital account transactions such as investing in debt / equity instruments, deposits and buying properties. Authorized remittances also include most current account transactions such as travel expenses, education, family support, gifts, and donations.

“Many Indian brokers have started to offer the possibility of easily investing abroad through reconciliations. The new class of investors after the start of the pandemic have seen the performance of technology stocks abroad (mainly the US Nasdaq) and are keen to participate in this development, ”said Deepak Jasani, head of trade research at retail – HDFC Securities.

As global economic activity began to recover, so did investments in stocks and debt securities. They more than doubled to $ 171 million between April and June 21, up from $ 84 million in the same period a year ago. In addition, investments in deposits increased sharply during the period.

Financial players have launched technological initiatives to bring money transfer services to the country’s micro-markets. Emkay Global Financial Services recently partnered with Stockal – a global investment platform – to help clients invest in stocks and securities listed in the United States.

“Diversification is essential because it reduces risk and helps maximize earnings,” said Ashish Ranawade, Product Manager, Emkay Wealth Management. “The US markets, through stocks and exchange-traded funds, offer one of the most interesting avenues for diversification.”

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