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Mint
25-04-2025
- Business
- Mint
Foreign ETF lovers find new darlings in China, Brazil
Retail investors romancing the US through exchange-traded funds are discovering new vistas in emerging markets this year. Many Indians who invest abroad under the Reserve Bank of India's liberalized remittance scheme (LRS) appear to have shifted preference to China and Brazil since the start of the year, data from broking platforms indicated. The change comes amid a steep fall in US equities after President Donald Trump unleashed a tariff war. Mint spoke to six brokers who offer direct access to global markets and found that investments into China and Brazil grew relatively more than the US in the current year, albeit on a low base. Still, it shows a marked shift from before, when investors focused mainly on the US markets. 'After January and especially through February and March, there has been growing interest in China, particularly in China-oriented ETFs as well as a few Chinese companies—a time where we noticed a bit of a de-focus on the US," said Sitashwa Srivastava, founder and chief executive officer of Borderless, a platform which has done over $2 billion in trades over the last three years. Also read | Investors rush to cash in on gold ETFs as volatile equities keep them on edge At Vested Finance, another access provider, investments in Brazil-focused ETFs stood at $3 million 2025, an 80-times increase from all of 2024. China-focused ETFs saw a 10x increase to $10 million against all of 2024, outpacing the 3X growth in US ETF volumes. In 2025 so far, investments in US ETFs via Vested stood at $80 million. Data from Appreciate Wealth confirmed the trend. Investments into China grew 36% by volume of trades and 61% by value of investments in 2025, compared to the previous full year. For investments into Brazil, the platform saw a 110% increase in volumes and 245% increase in value in 2025, against all of 2025. In contrast, US-focused investments on the same platform rose just 11% in volume and 18% in value during the same period. The platform did not share data on gross volumes. The shift is driven by more attractive valuations in Chinese and Brazilian markets than in the US. The Dow Jones had corrected 6.57% since 1 January. Against this, the Shanghai Composite and IBovespa have outperformed 1.06% and 10.7% in the same period. In January, Brazil's Ibovespa index traded at a trailing valuation of 10.8x, while the Shanghai Composite Index was trading at 16.2x. The valuations for both were lower than that of the Dow, which was at 23.21x. The growth in investments in China and Brazil coincides with an increase in outbound remittances via LRS for investments in equity and debt, increasing 65% month-on-month to $173.84 million in February, as per RBI. Outbound investments in equity and debt via LRS increased 20% year-on-year to $1.51 billion in FY24. Over a period of five years, the same metric has increased 3.6 times, from a mere $422 million in FY19. Read this | These foreign funds have been selling more Indian stocks than the others. They aren't the ones you thought they were. 'We are seeing an increased interest from Indian investors to buy China stocks, especially the China Tech ETF," said Mayuresh Kini, co-founder of Zinc Money, a broker who offers global market access. Shrivastava added that within China, investors are preferring energy, electricity, EV and tech ETFs. Viram Shah, co-founder and CEO of Vested Finance said, 'Investors, both institutional and retail, are rotating out of crowded trades and into regions like China and Brazil, which are poised for a rebound and haven't yet priced in all the potential upside." He added that this comes at a time when the US equities, especially large-cap tech stocks, are facing multiple headwinds: elevated valuations, geopolitical risk, and earnings uncertainty. Unlike Asia, Brazil's appeal stems from reasonable valuations, a recovering economy, and limited exposure to global tariffs, said Ankita Pathak, macro strategist and global equities fund advisor at Ionic Asset. She added, 'With the organization for economic growth and development (OECD) raising growth forecasts to 2.5-3% for 2025 and expectations of rate cuts following high real interest rates and cooling inflation, investors see strong macro tailwinds." Also read | Big Four of Indian IT lose market share; HCL Tech's outlook offers little relief Even though the US remains a dominant investment destination for most, many investors already have substantial exposure to US, say experts. 'With growing concerns around tariffs, recession risks, and broader uncertainty in the US, some are exploring diversification opportunities like China and Brazil," said a person from and AMC. Even with the US imposing higher tariffs on China, an independent China story will continue, say experts. Pathak said, 'The reason China hasn't collapsed despite facing global criticism is because it's operating from a position of strength. There are many Chinese businesses that are not dependent on the US, which are either domestic-focused or aligned more with the EU."She added that there is more scepticism around China, but there is also more upside than downside. And read | Boom to brakes: Bulk and block deals fizzle out amid market volatility
The Print
21-04-2025
- Business
- The Print
Trump tariffs led to a brokerage firm seeing 400% more investments in US stocks. What's the rush about
HDFC Securities told ThePrint that it recorded a 130 percent spike in the first two weeks of April, compared to March. Exchange-traded Fund (ETF) investments surged, with allocations to Nasdaq-100 ETF (QQQ) doubling month-over-month. Beyond the US, the firm also saw special interest in Brazil-focused ETFs and Chinese equities. Several brokerage firms, like ICICI Securities, Kotak Securities and HDFC Securities, allow investors to invest in overseas markets. In the wake of US President Donald Trump's announcement of tariffs, most of these firms saw an uptick in investments in American markets. New Delhi: The Indian stock market is currently the country's favourite investment avenue with more than 110 million registered investors. Even more notable is the rising number of Indians investing in overseas markets, and the US market attracting the highest revenue. In September 2024, the total direct investments from India into the US markets stood at $6 billion, with $1 billion invested in the previous year alone. However, a relatively newer player in the brokerage landscape has gained remarkable attention this month. Within two weeks of Trump's tariff announcement on 2 April, INDmoney saw a 400 percent month-on-month spike in fresh investments by Indian investors in US stocks. Ranked as the 11th largest brokerage firm in India and the fastest growing by National Stock Exchange, the Gurugram-based investech start-up was founded by Ashish Kashyap and Nikhil Behl in 2019. The super finance app allows users to invest in stocks, mutual funds, Initial Public Offers (IPOs) and fixed deposits, alongside US stocks. INDmoney has gained significant momentum over the last two years. Reacting to the huge traffic on the platform in the first week of April, Behl, the company's CEO (stocks), posted on X on 6 April: 'Can y'all (sic) please chill on the US stocks investments this is insane our team needs sleep!' Can yall please chill on the US stocks investments this is insane our team needs sleep! @INDmoneyApp #USstocks — Nikhil Behl (@Nikhilbehl_) April 6, 2025 'Following the recent tariff announcements, interest in US stocks on our platform has surged. Investor participation has already surpassed previous highs for the year, marking a record-breaking month on multiple fronts. Over 40 percent of these fresh inflows were directed toward the iconic MAANG stocks, underscoring how investors are viewing the correction as a strategic buying opportunity,' Behl told ThePrint. 'The trend is clear: Indian investors are rapidly diversifying globally and tapping into international growth stories.' MAANG stands for Meta, Amazon, Apple, Netflix and Google. Currently, INDmoney boasts of a userbase of over 17 million people. One of the features that it uses to its benefit, and that users have appreciated, is the range of wealth management options that the platform provides. These include the Indian stock market, mutual funds, futures and options, National Pension System, IPOs, and US stocks. One move that has worked well for the company, according to Behl, is fractional trading. 'Fractional trading has become mainstream on our platform. This innovation empowers users not just to start investing with smaller amounts—like buying as little as $1 worth of Tesla or Apple—but also provides better precision in asset allocation, allowing investors to deploy their exact intended amount into any stock without being constrained by the share price. This clearly indicates an increasingly informed and highly engaged retail investor base.' Fractional trading is defined as investing a small amount of money in buying a certain portion of a high-priced stock/share, which may not be affordable for small investors. Behl added that initially, the highest traffic on the app and website was from investors wanting to invest in the 'Magnificient 7' stocks (Apple, Alphabet or Google, Microsoft, Amazon, Meta, Tesla and Nvidia), but many customers are now leaning towards ETFs, enabling diversification across various sectors like AI and robotics, and global markets like China and Europe. 'On our platform, for US stocks, most people hold their investments for medium-to-long term, and investments in ETFs vs direct stocks has gone from 20-80 percent, to 40-60 percent in recent years,' he said. At INDmoney, Behl has overseen the company's foray into US equities, Indian stock trading and cross-border investing. Previously, Behl worked as a quant analyst and trader, and had co-founded FlameBack Capital, a SEBI-registered advisory firm, as well as a food tech start-up. Kashyap, INDmoney's other co-founder, has been a key figure in India's tech and internet ecosystem. He previously founded the Ibibo Group—home to brands like Goibibo and redBus—which later merged with MakeMyTrip, in what was then the country's largest tech M&A deal. He has also co-founded digital payments platform PayU India, and previously served as Google India's country head. Also Read: Not politicians, India's wealthiest families underreporting incomes, finds study by DSE director How INDmoney invests in US markets A lot of Indians are turning to overseas markets, especially the US, to diversify their investment portfolios. The US market, with a large pool of companies listed on the exchange, provides investors the opportunity to buy shares of big heads, like Apple and Tesla. The US market is also known to give higher returns, compared to Indian stock exchanges, and currency appreciation can further enhance them. INDmoney has structured its US stock investment offerings through a dual approach that leverages both the GIFT City framework and direct partnerships with US-registered brokers. It facilitates international investing via its group entity, INDmoney Global, which is registered as a broker-dealer with the International Financial Services Centres Authority (IFSCA) at GIFT City. Users have the option to invest in US markets in two ways—directly trading in stocks listed on US exchanges, or gaining exposure to leading American companies via Unsponsored Depository Receipts (DRs) listed on the NSE IFSC exchange. For those opting to invest directly in US equities, INDmoney holds partnership with SEC-registered brokerage firms in the US. Upon completing the Know Your Customer (KYC) process and onboarding, a US brokerage account is created in the investor's name through one of these partner firms. The company claims to have streamlined the funding process, allowing users to load their US stock wallet effortlessly. To enable quick cross-border transfers, INDmoney also has tie-ups with several leading private sector banks in India. These partnerships, the firm says, ensure that funds can be transferred to US brokerage accounts within a matter of hours, making the overall investing process smooth and user-friendly through the INDmoney app. Funding, revenue & market valuation Since its inception, INDmoney has raised $133 million—the last funding round being in January 2022, in which they secured $75 million, valuing the company at over $600 million. Prominent investors include Tiger Global, Steadview Capital and ABG Capital. According to recent filings, INDmoney's operating revenue rose to Rs 70 crore in FY24, up from Rs 40.6 crore in FY23. Total revenue, factoring in other income streams, reached Rs 128 crore—a substantial portion of which came from interest and gains on the company's sizeable financial assets worth Rs 725 crore—in March 2024. A closer look reveals that Rs 57.7 crore of this income was generated through returns on current investments, underscoring INDmoney's strategy of leveraging capital reserves for financial cushioning. Despite the revenue growth, the start-up's losses widened 12 percent year-on-year, hitting Rs 82.55 crore in FY24, up from Rs 73.9 crore the previous year. This growing deficit highlights the cost-intensive nature of INDmoney's expansion efforts as it seeks to entrench itself in India's crowded fintech space, alongside heavyweights, like Zerodha, Groww and Upstox. Distribution services were INDmoney's main revenue driver, contributing 76 percent to the operating revenue and clocking Rs 53.6 crore in FY24—a 56 percent jump from the previous year. Meanwhile, revenue from broking activities exploded from just Rs 10 lakh in FY23 to Rs 10.7 crore in FY24. The fintech firm's total expenditure stood at Rs 233.6 crore in FY24, a 17 percent increase from the previous year. The lion's share went towards employee benefits, which amounted to Rs 124.53 crore—an 11 percent year-on-year rise. Technology remained a key investment area, with IT expenses tallying Rs 57.18 crore, while marketing efforts consumed Rs 33.80 crore, signalling an aggressive push for customer acquisition. (Edited by Mannat Chugh) Also Read: V is not for victory, but volatility—what is VIX & why are Trump's tariffs roiling the 'fear gauge'
