Readings: SEBI-FII Call, One World Taking Risks, State Capitalism
The Securities & Exchange Board of India is trying to limit the $88 billion of investments made by unregistered investors, including hedge funds, in Indian stocks. The government doesn’t permit hedge funds to directly buy the nation’s equities, so they use the derivatives to invest.
Sub accounts of brokers registered in India will be allowed to apply for a license if these are used for their own trading, Damadoran said. Other sub accounts that don’t apply for a license will be barred from issuing derivatives, he said.
- NYTimes: One World, Taking Risks Together
The trend extends into stock exchanges in Asia, where shares in India and China are experiencing a parabolic rise. “You have speculative American money invested in India, just as you have speculative Indian money invested in India,” he says. “As markets become more linked, diversification doesn’t work as well.”
- FT: The brave new world of state capitalism (a bit dated)
Fevered attention is currently focused on so-called “sovereign wealth funds”. . . . In all, they control some $2,200bn, with $2,100bn in the top 20 funds. The seven biggest belong (in order of estimated size) to Abu Dhabi ($625bn), Norway ($322bn), Singapore – GIC ($215bn), Kuwait ($213bn), China ($200bn), Russia ($128bn) and Singapore – Temasek ($108bn).
The sovereign funds remain far smaller than official foreign currency reserves (approximately $5,600bn). But the expectation is that these funds will grow rapidly, possibly to exceed official currency reserves in a number of years.
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