Now, you can invest $50,000 overseas
The annual limit for foreign remittances by individuals has been increased from $25,000 to $50,000.
By Team ET, TNN |
This could be what the local commodity market was awaiting for. The increase in the annual limit for foreign remittances by individuals from $25,000 to $50,000 could well boost commodity futures trading, which has seen investors making maximum use of the arbitrage window between global and local markets. The hike in the limit, that was hitherto too low to attract investors in equities, mutual funds, forex and real estate, may now encourage flows into these segments as well.
According to Commtrendz Risk Management Services director Gnanasekar Thiagarajan, “the earlier limit barely translated to about Rs 11 lakh annually, which was too small an amount to make good profits in commodities. Investors would often put in the entire amount and overlook the fact that this should include topping up of margins according to the market movement.” He added that the increase in limits would ultimately result in higher volumes. The commodities that have high arbitrage opportunities are bullion, energy and metals.
However, some contrarian views are emerging in the market as well. An analyst from a prominent Mumbai-based brokerage said, “investment routes in India are currently offering comparatively high returns. Countries including US, Europe or Hong Kong and Singapore, offer only marginally higher returns on investment. I don’t foresee investors rushing to invest abroad.”
Bullion consultant, Bhargava Vaidya, of BN Vaidya and Associates, reckons that the latest move could be positive for investments. However, the impact of the hike in the overseas remittance limit would be only marginal as far as commodities are concerned. In any case, brokerages and investors have to obtain RBI approval, and a certificate of no objection from the commodity regulator, Forward Markets Commission, to open subsidiary companies abroad to make use of the investment route. For this, the present limit is seen as very small.
Terminals of foreign brokerages and exchanges are also not yet permitted to be set up in India.
According to Commtrendz Risk Management Services director Gnanasekar Thiagarajan, “the earlier limit barely translated to about Rs 11 lakh annually, which was too small an amount to make good profits in commodities. Investors would often put in the entire amount and overlook the fact that this should include topping up of margins according to the market movement.” He added that the increase in limits would ultimately result in higher volumes. The commodities that have high arbitrage opportunities are bullion, energy and metals.
However, some contrarian views are emerging in the market as well. An analyst from a prominent Mumbai-based brokerage said, “investment routes in India are currently offering comparatively high returns. Countries including US, Europe or Hong Kong and Singapore, offer only marginally higher returns on investment. I don’t foresee investors rushing to invest abroad.”
Bullion consultant, Bhargava Vaidya, of BN Vaidya and Associates, reckons that the latest move could be positive for investments. However, the impact of the hike in the overseas remittance limit would be only marginal as far as commodities are concerned. In any case, brokerages and investors have to obtain RBI approval, and a certificate of no objection from the commodity regulator, Forward Markets Commission, to open subsidiary companies abroad to make use of the investment route. For this, the present limit is seen as very small.
Terminals of foreign brokerages and exchanges are also not yet permitted to be set up in India.
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