17 October 2013
HNIs inclined to investing abroad : CEO, Motilal Oswal Private Wealth Management: Business Line
We are suggesting fixed maturity plans and short-term funds currently for a debt portfolio. A. V. Srikanth, CEO, Motilal Oswal Private Wealth Management
A. V. Srikanth, CEO, Motilal Oswal Private Wealth Management, talks about trends in investments by High Networth Individuals (HNIs) across asset classes, in an interview toBusiness Line. Excerpts:
There is volatility in assets classes, such as equity, bonds and gold at this point in time. Are HNI clients looking at real estate?
Till two-three years back, investment in physical real estate was happening at a healthy clip alongside financial investment through routes such as real estate funds. However, in the last two years, the build-up in both physical and financial real estate has slowed down.
It doesn’t have much to do with high interest rates. HNIs, who are investing full blown capital, are not bothered about interest rates unless they are having a levered play and this has not been in action for quite some time. Things like 80:20 schemes too are used by the mass affluent and are not necessarily widely sought after by the HNIs.
How is the interest in commodities after the NSEL fiasco?
The approach to commodities has been through a fixed income mindset in the issue of NSEL. People thought it was a guaranteed product or one with a predictable pay-off structure. Even though they looked at a class which is risky, they went about it as if building exposure in it was supposedly safer for them. In the ultra HNI space, commodities investment has largely been restricted to gold.
How is the demand for investment in gold now?
It has waned a lot. Incremental savings is not coming into gold because one is not too sure now what is the view on gold. Today, there is nothing much to say except that it is a portfolio insurance and hedge against inflation. Near-term visibility of gold prices is very low today. The prices are also at an all-time high and there is a disinclination to allocate more here.
Call auction for illiquid stocks has hurt investors : Chairman, BSE Brokers' Forum: Business Line
The biggest challenge before the broking industry is that retail investors are losing faith in the market. — Siddharth Shah, Chairman, BSE Brokers' Forum
We run a quick check on the mood in the market with Siddharth Shah, Chairman, BSE Brokers' Forum. Excerpts from the interview:
What are the main challenges before the Indian broking industry now?
The biggest challenge before the broking industry is that the retail investors are losing faith in the market Of the total population of 120 crore, the number of registered investors is only 1.50 crore. Issues like the NSEL scam has dented the sentiment badly. Indians have investment allocation of 44 per cent in fixed deposit, 29 per cent in life insurance, 22 per cent in postal schemes. Investments in the equity markets is only 3 per cent while the global average is around 35 per cent. The other problem is that broking industry is highly fragmented with more than 1,400 brokers registered and 7,7000 sub-brokers.
Competitive brokerages charged by brokers has killed the industry. The cost factor in the broking industry is very high due to high manpower and compliance cost. Margins are, however, coming down since brokerages declined more than 90 per cent due to cut-throat competition.
What are retail investors doing these days - buying, selling or sitting on fence?
The retail investor has simply run out of the market. Whenever there is sudden rise in stock prices, there has been selling.
Retail investors are waiting to exit from the markets.
They are badly trapped in sectors such as real estate or infrastructure, where stocks have been badly battered.
Even though the index is showing 20,000 levels, this is not reflected in the stock prices
What in your opinion should the Government do to increase retail investor interest in the equity market?
The Government launched the Rajiv Gandhi Equity Savings Schemes (RGESS) which did not pick up.
The scheme is good but has to be modified with certain changes like all existing and new investors should be covered under the scheme, the entire amount of Rs 50,000 invested should be allowed as income-tax deduction and the lock-in period should be reduced from three years to one.
These changes would give retail investors the motivation to be part of the market and they would invest for long- term.
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