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Corona, China, and FDI policy change in India

Uploaded Date 27-Apr-20
FDI CHANGE

As the new year and the new decade started, the world also came to terms with a new word, a new normal that we call Corona Pandemic now. The origin of the virus was traced back to Wuhan and gradually it spread to the entire world, although not at the same pace. China was the hardest-hit country in the beginning but as are the things with the Dragon, it recovered quickly and flattened its curve. The rest of the world is still simmering with the aftermath of the pandemic.

As the anecdote goes, desperate times need desperate measures, the entire global economy came to a virtual standstill. Factories are closed, public gatherings have not only been banned but also legally penalized. The entire world’s economy has hit a pause button except for China.

China’s New Investments

During the entire market glut of 2020, the Chinese stock market was the least impacted. While Dow Jones, Nifty, and Sensex were hitting the circuit breakers, the Shanghai Stock Exchange was almost behaving as if everything was normal. And perhaps it was. Afterall as soon as the global markets plummeted, China started acquiring stakes in global companies, banks, e-commerce businesses at throwaway prices. In this series of investments, PBoC acquired a 1% stake in HDFC, a move that brought an FDI policy change in India. Although PBoC was already having 0.8% stake in the Indian giant, the new investment surely sent jitters and called for a change. In light of the recent events, Shyam Advisory brings to you a detailed analysis of the FDI policy regime, new changes, and its impact on your investments. Further, we have also highlighted the importance of following nifty option tips and other stock option tips.

What Changed in India

The Chinese acquisition almost forced India to change FDI norms as it was pretty much clear that PBoC’s investment would not be the only move China will make, in the aftermath of a Corona sick market. India’s changed policy regime now states that the foreign investments coming from the firms in the neighboring countries would need the government’s approval. Thus, in simpler terms, if a country shares border with India then investment’s arising from the country would need a nod from the government first. This has virtually ensured that China could not go ahead with an “Opportunistic Takeover” in a simmering economy.

Has India Done it Before

The FDI in India happens through two routed called “Automatic Route” and the “Approval route”. Under the government’s approval for FDI in certain sectors already existed in India. Hence as a policy regime, India has done nothing new except that it has broadened the umbrella of restrictions. Now even if a company is not even located in India’s neighboring countries but its owner is a citizen or a resident of such countries then it would face similar FDI approval norms.

What Impact Will it Have

India’s move invoked a furious response from China. The dragon called it unfair and urged India to recall the ‘discriminatory practice’, citing them to be a violation of WTO’s trade agreements. It is ironic of China to bring WTO’s norms into its defense as the country itself has been accused of violating many trade norms, has been engaged in trade wars, and globally recognized as a currency manipulator. Also, India is not the only country that has brought in place this kind of restriction. Many European countries, like Spain, Italy, and the European Union itself has brought in practice such policies, in order to avoid takeovers by China. It is yet not clear whether the Dragon will approach WTO but these uncertain times surely needs cautions and following stock tips become even more important than before.

Intraday Tips and Commodity Tips

In a time when Nifty’s next move can be as unpredictable as a roll of a dice, it is of utmost importance that you follow share market tips shared by your advisors and avoid gambling in the market. In the absence of well-researched intraday tips, you might bleed in this market. The rupee is also having a troubling time and other currencies are getting weaker against the U.S. dollar. The news of crude oil futures trading in negative might have reached you already.

Hence the currency tips and crude oil tips from Shyam Advisory can help you in hedging your investments and keep your portfolio in green, even during the Corona. It is better to stay updated and save your investments rather than regretting it later on.