Danish online investment bank Saxo Bank announced its India entry, offering an opportunity for Indian investors to invest in global financial instruments. Rudra Dalmia, managing director of Saxo Bank India, outlines the bank's future plans on the occasion of its India entry in an interview with Dilip Kumar Jha. Edited excerpts:
What are your plans for India?
We plan to enter the online brokerage space in India initially, and then look at expansion opportunities as the market evolves. We are a leading online trading platform of the world pioneering white labelling for trading financial products. Saxo Bank is the trading engine behind Citi FX Pro of Citibank (globally) among many other global financial partners. We would like to utilise our global successful experience in India.
What are the offerings by Saxo Bank for Indian investors?
Saxo Bank offers a platform where the Indian investor can trade the widest range of global equity and other non-margin products as per RBI's (Reserve Bank of India) norms for allowing resident Indians to invest overseas.
Apart from online trading facility, will Saxo Bank offer advisory services in India?
We offer a fantastic platform for investors to seek information from experts on investment opportunities, but Saxo Bank has no plans to actively offer advice in India.
What kind of financial instrument can Indians invest abroad?
Indians can invest in exchange-traded financial products without the use of margin funding, as RBI only permits investing in non-margin products.
Do you think the time is ripe for Indian investors to invest abroad?
Investing overseas is about two things: diversification of risk and capitalising on opportunities not available to us in the Indian stock market. The investment goals can be deep value, long-term stability or simply capitalising on a growing trend.
While investing overseas there is a big currency risk. How should an investor derisk it?
Investments in overseas financial products, such as equities and bonds, can generate significant returns and give the investor a greater degree of portfolio diversification, but they do introduce an additional risk, that of foreign currency. Since currency exchange rates can have a sizeable impact on portfolio returns, investors should consider circumventing this risk. Hedging instruments such as currency futures, forwards and options are available for investors.
From which types of instruments can Indian investors benefit the most?
Investment strategies differ from person to person, and similarly investment products should be selected based on the risk profile of investors. I believe the Indian investors should look for long-term capital appreciation and invest in instruments accordingly.
Which asset class, according to you, should do well in 2013?
Equities, as I believe, we have reached a point where most of the bad news is known or factored into the valuations. Of course, stock selection based on fundamental and macro knowledge is critical.