Now that global markets are rallying, investors are looking beyond Indian shores
How would you like to invest in lithium mining giant SQM in faraway Chile? Or buy Bank of America shares given the recent rally in US banking stocks? Or, place your bet on China through the Xinhua Exchange-Traded Fund (ETF), which is listed on the New York Stock Exchange (NYSE).
Ever since the Reserve Bank of India liberalised the remittance limit for overseas investments by Indian individuals to $200,000 in 2007, the options have been opening up. Early movers like ICICI Securities tied up with Pension Financial Services in late-2007 to allow Indian investors to directly buy and sell shares overseas. So did Reliance Money in 2008.
The great meltdown of 2008 may have halted the party. But now that global stock markets are rallying again, investors are looking beyond Indian shores.
So Kotak Securities tied up with Saxo Capital Markets to offer Saxo’s global trading platform to Indian investors, who can buy shares or ETFs on 24 stock exchanges through this. By September, Indian Infoline will operationalise its agreement with Interactive Brokers Llc, allowing investments in equity shares, commodities and currency-linked ETFs on 80 stock exchanges.“We’ve got positive response from clients. Investing opportunities will emerge in different markets,” says Arindam Chanda, vice-president and head of marketing and products, Kotak Securities.
Adds Vishal Gulechha, head of online equity products, ICICI Securities: “Over the last three-four months, interest in investing in international markets has renewed. The markets are doing well. And the dollar too has cooled down, which makes this option more lucrative.” Of course, investing overseas is meant for high net worth — and informed — investors.
Investors are looking for “portfolio diversification through geographical spread of investments”, says Sudip Bandyopadhyay, managing director, Reliance Money, with a tie-up with Options Xpress.
How do you invest overseas? The Indian brokerages typically act as facilitators. Kotak Securities, for instance, helps clients to open a Kotak Trader account with Saxo.
At ICICI Securities, an investor can upgrade his domestic e-broking account or get a new account with Pension USA. They must fill a simple account opening form and provide proof of identity. ICICI charges an account opening fee of Rs 999 while Kotak charges Rs 750.
The investor then remits money overseas to trade. At ICICI Securities, you can remit $1,000 or less. Reliance Money has a minimum remittance of $1,000. The same for Kotak Securities and India Infoline is $10,000 (around Rs 5 lakh). Then the investor logs onto the local or international broker’s site and starts trading.
There’s a transaction fee. ICICI Securities charges $9 or 0.75 per cent of the trade value, whichever is higher. Kotak Trader charges 0.75 per cent of the trade value. At Reliance Money, it’s 0.5 per cent of the transaction value while India Infoline will charge two cents per share or a minimum of $4 per trade.
Apart from the usual stock market risks, investors must consider the currency risks.
