China’s PBoC keeps India stock portfolio | Mint – Mint

NEW DELHI : The People’s Bank of China (PBoC) continues to own shares worth at least 25,000 crore across 20 major Indian companies, including Tata Consultancy Services (TCS) Ltd, Infosys Ltd, Hindustan Unilever Ltd and Vedanta Ltd, despite escalating geopolitical tensions between the two nations over the past three years, company filings showed.
Infosys and ICICI Bank are PBoC’s biggest portfolio holdings in India. The Chinese central bank owns 0.8% of Infosys, worth 4,678 crore, and 0.7% of ICICI Bank, worth 4,583 crore at current prices. It also owns a 0.24% stake in TCS, valued at approximately 3,157 crore, and a 0.4% stake in Bajaj Finance, worth 1,928 crore. Other portfolio companies include Maruti Suzuki India Ltd, Asian Paints Ltd, Tata Steel Ltd and Kotak Mahindra Bank Ltd.
A person who has dealt with PBoC in the past said the Chinese central bank has been cautious about keeping its holdings below the 1% threshold in companies that require public disclosure, aiming to prevent the kind of backlash it faced in 2020 after it became known that its investments exceeded 1% in Housing Development Finance Corp., the then parent of India’s largest private lender, HDFC Bank Ltd.
The acquisition sparked concerns in New Delhi that Chinese investors were looking to snare stakes in Indian firms following a sharp fall in stock prices in March and April of that year due to the pandemic. Shortly after the backlash, PBoC pared its stake in Housing Development Finance Corp. below 1%.
Under Securities and Exchange Board of India (Sebi) regulations, listed companies are required to disclose ownership stakes exceeding 1%. However, during annual filings, companies also provide a more extensive list of shareholders to the ministry of corporate affairs (MCA). The data compiled by Mint is based on these MCA filings. However, any investments made through indirect routes such as participatory notes (P-notes) or through related entities could not be ascertained.
An email sent to PBoC remained unanswered.
“Some of the early investments PBoC made in India were through passive funds, but subsequently, since 2018-19, they started picking up small quantities of shares in select Indian companies. Compared to its global portfolio, PBoC’s investments in India are small, probably due to the geopolitical equations,” the person said. “India remains the most attractive market globally, and hence, all the big global institutions look for some exposure. However, PBoC has been very cautious in India and in the last three years, they have kept their stakes below 1% in all portfolio companies.”
Mint could not verify when PBoC purchased these stakes and how their India portfolio has changed post covid since, in the past, companies disclosed their MCA filings infrequently.
The development assumes significance as the rise of PBoC’s portfolio in India sparked concerns during the pandemic. In 2020, Chinese funds aggressively invested in developed and developing markets equities amid a global markets meltdown. These investments occurred amid rising tensions between India and China, with border clashes in the Ladakh region leading to the death of 20 Indian soldiers and an unspecified number of Chinese troops.
The investment in Housing Development Finance Corp. prompted the Indian government to tighten rules applicable to Chinese investors. In a circular issued in 2020, the government said any foreign direct investment (FDI) coming from China needs prior approval.
The investment in HDFC prompted the Indian government to tighten rules applicable to Chinese investors. In a circular issued in 2020, the government said any foreign direct investment (FDI) coming from China needs prior approval from the Indian government. However, FDI is made only in unlisted companies, while investments into listed entities are governed by Sebi’s foreign portfolio investor (FPI) rules. Currently, there is no restriction on FPI investments from China.
There are currently 17 FPIs in India from China. Of these, at least 11 are Chinese government-owned. Best Investment Corp., a subsidiary of China Investment Corp. has eight different funds operating in India. However, these funds don’t own any significant portfolio in India, according to the data.
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