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Home > Investment School > The Foreign Money - Who is bringing what

The Foreign Money: What how and why?

Ownership Without Control

Foreign
Portfolio
Investment
also known as
FII Investments



Top 10 Flls In India Based On M-Cap As On Sept ‘05 Market Capitalization of Investments as in December 2005 in US $ Billion*

HSBC

3.12

Morgan Stanley

2.42

Merrill Lynch

2.31

Goldman Sachs

2.26

CLSA

2.10

Aberdeen

1.96

Copthall

1.85

Citi

1.81

Genesis

1.80

Capital

1.71


*Based on holdings of more then 1% and above in Individual companies.
Sources Exchanges and company web sites.


The top 10 investments by Foreign Institutional
Investors (FII) in India
Companies

Investment value in Billion$ - December 05

Market cap* as on Jan 04 2006

Trailing PE as on January 04, 2006*

Infosys

7.90

83790

38.6

Reliance Industries

6.30

129541

14.1

Bharti Tele

2.60

65198

29.7

HDFC

3.20

30962

27.4

ONGC

2.80

169108

11.5

Satyam

2.00

24752

29.3

HDFC Bank

2.30

22889

30.3

SBI

1.60

48322

10.5

BHEL

1.60

35086

30.3



Consequences of FII

Economy
  • Has no effect on the GDP

  • Inflationary

Stocks
  • Stocks rally upwards fuelled by a flood of liquidity

  • Companies have more access to foreign money


Ownership with control

Foreign
Direct
Investment
(FDI)



The FDI hot spots!

Asian

Investors

European Investors

North American investors

China

China

China

India

India

India

Hong Kong

Poland

United States

Australia

Russia

United Kingdom

Vietnam

United States

Brazil



Consequences of FDI

Economy
  • The GDP expands


  • Large Inflows of Foreign Money comes into the country causing an increase in the Foreign Exchange Reserves of the R.B.I


  • Greater variety of Goods and Services are made available to domestic consumers


  • An increase in FDI generates employment as there is an increase in manufacturing activity


  • Small scale traders and manufacturers lose out in the short term


Stocks
  • The leaders benefit while the 2nd tier companies lose out


  • Stocks gain exponentially


  • The country is made an outsourcing hub


  • Domestic companies making placement to foreign majors have access to better technologies of production and also to newer markets




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