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India’s IPO frenzy and what China’s regulatory upheaval has to do with it

By Samantha Goerling

Global investors are increasingly looking to invest on exchanges in the world's seventh-largest economy, India, and there is a confluence of factors at play.

India has been experiencing a mega year of Initial Public Offerings (IPOs). While there are several 'pull' factors, there may also be a 'push' factor at play, prompting some to look to new markets and rebalance their portfolios. Recent months have been turbulent for Chinese exchanges and shares in Chinese companies listed abroad amid a recalibration of regulatory changes in the world's second-largest economy.

The quick succession of regulatory overhauls has been met with mixed responses from investors and hedge fund managers, according to Matthew Lui, Vice President Investment Research at Canterbury Consulting. 

"Some managers we work with who have been investing in China for decades see this as 'business as usual'," Mr Lui said. "The Chinese Communist Party has a track record of addressing its social concerns (such as income inequality and equal opportunity) through regulatory action. Since China is run by a one-party regime, it can act quickly, leading to surprises and volatility, as we have seen recently.

"Other managers have reduced their exposure to China given the recent volatility and uncertainty around which sector may come under regulatory crosshairs next."

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