Capital inflows are likely to increase to India -- particularly in the infra sector , with the pro-reforms Modi Budget presented earlier in the month aiming at tuning in of the rules for the capital markets with that of international markets.
Modi Government’s push to investment in the infrastructure segment through PPP route would entail a large investment that would neccessarily have to come from overseas as domestic investments would be limited, holds SGX.“We have a more positive view on India, than it was six-months ago. The Budget presented in July indeed aims at harmonization of the rules and regulation for capital markets with those of markets abroad,” said Magnus Bocker, CEO of Singapore Exchange ltd (SGX). SGX holds that it would be instrumental in mobilizing higher capital inflows in the infra sector from overseas.
He said that global investors were now watching India particularly after the easing of the listing rules made last September and the latest Budget allowing companies to list and raise capital overseas without first being listed in India. This move would help companies to garner funds on SGX through a variety of financial instruments including equity listing, real estate investment trusts (REITs) and later also currency futures trading.
With the new Indian Government stressing on the strengthening of rupee, SGX was looking forward towards working on the opening up of the currency futures trading, Bocker said, particularly as SGX was one of the main stock exchange hubs in the ASEAN region.When asked about SGX’s future plans for India, Bocker said: “We work with BSE and NSE very closely. We will look at what we can do to service their needs as against ownership or anything like that.”
Speaking on international clearing of Indian bonds, Bocker said the initial focus would be on clearing infrastructure like Euroclear, where they will keep these bonds so that the mechanism for settling them becomes international.
There was more policy certainty with the new Government at the Centre, Bocker said which will eventually help corporates. “The biggest impact, I think, is that there is going to be policy certainty. That is the single largest help. You can take each policy and argue whether that is the best policy or not but that is not the point as much as there is certainty around policy,” he said. “As long as you have certainty, people will know how to operate within that policy and then therefore make their investments or choices,” he added.
SGX is also expected to help Indian firms get listed and raise capital in Singapore. The exchange will also support capital raising by Indian companies in Singapore. Such fund mop-up can be achieved through listing of stocks, bonds, real estate investment trust and depository receipts.“We look forward to working with partners in India to assist companies in reaching out to the international investment community,” he added.
Indian issuers have already raised more than $60 billion via bonds listed on SGX, making them the third largest in the bourse’s bond segment. These issuers covers a wide spectrum of sectors, including banking and financial services, energy and commodities, healthcare, utilities, telecommunication and transportation. Bocker said that about 80 per cent of listed international bonds by Indian issuers are listed on SGX.
Some Indian global depository receipts, representing shares already quoted on the Indian stock exchange, were also listed on SGX. Among the Indian firms listed on SGX included Ascendas India Trust since 2007, Indiabulls Properties Investment Trust and Religare Health Trust. The exchange’s association with India started in 2000, when SGX and NSE collaborated to develop futures markets. Besides, SGX has a five per cent stake in BSE, allowing the Singapore bourse to participate in India’s capital market.