It all started with a seemingly innocuous transaction on April 12 when state-owned People’s Bank of China (PBoC) bought an additional 0.2 per cent stake in HDFC Ltd., India’s largest housing finance company. Added to PBoC’s existing 0.8 per cent stake, this took the Chinese bank’s equity past 1 per cent — triggering a notification to stock exchange regulator, the Securities and Exchange Board of India (Sebi).
A registered foreign institutional investor (FII) buying a stake in HDFC is perfectly legal. It was also a smart bargain. Stock markets in the world had been topsy-turvy and till that day HDFC Ltd. had seen 32 per cent erosion in market cap since the market crash triggered by the spread of coronavirus.
Yet, the transaction rang alarm bells at Sebi coming, as it did, amid allegations of Chinese firms exploiting market crash to corner stakes in strategic firms of vulnerable economies. The market regulator played safe and promptly shot off a missive to the finance ministry seeking guidance. It asked if such transactions needed special attention.
In Delhi, its chain reaction continues to unravel till this day. Taking note of the threat posed by Chinese firms to companies in India that may be vulnerable due to economic stagnation because of coronavirus, on April 17, the commerce ministry’s Department for Promotion of Industry and Internal Trade (DPIIT) amended foreign direct investment (FDI) guidelines to apply curbs on investments from China. Aimed at preventing any opportunistic takeover from across the border, any fresh FDI from China now requires a specific nod from the government.
This story is from the May 17, 2020 edition of Business Today.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the May 17, 2020 edition of Business Today.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Picking Up The Paytm Pieces
Paytm Founder Vijay Shekhar Sharma Is Back In The Trenches After Rbi's Recent Action Left Him Without A Banking Platform. There Are Still Some Opportunities, But He Will Have To Move Swiftly To Grab Them
PMS Vs MF The Big Fight
How do mutual funds and portfolio management services match up? Know the score on structure, rules, entry fees, charges, and tax perks to pick the right path for your financial journey
Four Levers Of Enterprise AI Strategy
Wide-scale private sector AI deployment and new AI-based business opportunities and ecosystems can truly supercharge the Indian economy
"Don't let a unique chance slip by"
JEFF MAGGIONCALDA | CHIEF EXECUTIVE OFFICER | COURSERA
THE INCOMING DISRUPTION
The disruption in the industrial sector is still unknown, but inevitable. Companies need to wake up
THE WHEEL WHISPERER
For Manan Shah, Managing Director of MICL Group, luxury cars are not about showcasing one's wealth or status. It is about personal well-being
TRIPPING WITH TECH
A road trip is an adventure like no other. While you take in the experience, get some peace of mind with these nifty gadgets
Transforming Spaces
WHETHER YOU WANT TO REDECORATE YOUR BEDROOM OR HALLWAY, A GORGEOUS WALLPAPER ADDS FLAIR TO YOUR HOME AND ALLOWS YOU TO STAMP YOUR STYLE IN YOUR NEW ABODE
ALPHATALE
MONEY MANAGERS TO THE AFFLUENT DELIVERED ROBUST RETURNS TO INVESTORS IN THE PAST YEAR, THANKS TO THE BUOYANCY IN THE MARKETS. BUSINESS TODAY DECODES THEIR STRATEGY
"THE ALTERNATIVES SPACE CAN GROW 3X IN FIVE YEARS"
Vikaas M. Sachdeva, MD of Sundaram Alternates, talks about where India's alternative investment industry is headed