Indian Economy: Growth -2

[Guest]

<b>India beats Korea in FII inflows</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->According to data sourced from stock exchanges in Korea and Taiwan, since January ’05, FIIs have injected just over $1bn in Korean and $947m in Taiwanese shares. During the same period, Indian equities received $1.1bn, reveals Securities and Exchange Board of India (Sebi) data. The high inflow assumes significance as Indian equities have been underperforming since January ’05.

The Morgan Stanley Capital International (MSCI) Emerging Markets index rose 2.5% year-to-date (YTD). In comparison, the <b>MSCI India index remained flat at .526%. The MSCI Korea index rose 7% while MSCI Taiwan fell 1.9%.</b>

At the same time, India’s weightage in the benchmark emerging market indices, managed by agencies like MSCI and London’s FTSE, is a fraction of Korea and Taiwan put together. Weightages are determined by agencies based on factors like pace of reforms, growth rate of an economy and so on. <b>While Korea and Taiwan together account for around 35% of the emerging market indices, India accounts for only 6%.</b>

As a result, Korea and Taiwan have remained the biggest recipients of FII money. It was only in ’04 that India managed to receive the second highest FII inflow at over $8.5bn. Brokers say international funds are allocating more money to India than that recommended by these benchmark indices.
<!--QuoteEnd--><!--QuoteEEnd-->