Koreans poised to be India's first non-resident direct stock buyers

South Korean individuals are likely to become the first non-resident direct stock investors in India, after the South Asian country lifted the ceiling for foreigners' stock investments last year.

Mirae Asset Securities Co., a leading Korean brokerage firm, is preparing to launch a stock trading platform designed to allow retail investors to directly buy and sell stocks listed on Indian bourses, according to sources with knowledge of the matter on April 18.

The trading platform will be launched as early as the second half of this year, which individual investors can use either by visiting a Mirae Asset branch or over the phone.

The platform will provide access to all stocks traded on Indian stock markets, including popular names like Reliance Industries Ltd., HDFC Bank, ICICI Bank and carmaker Mahindra & Mahindra Ltd.

Once the direct trading system is launched as scheduled, Mirae will likely become the first brokerage house to provide such a service outside of India to non-resident stock investors.

Mirae Asset's subsidiary in India, established in 2006, will take charge of the trading platform, without joining hands with a local partner in the country.

Additionally, the Korean brokerage company is considering setting up both computer and mobile stock trading systems to allow for online trading of Indian stocks.

South Koreans have been ramping up direct investing in major stock markets, including the US, China, Vietnam and Indonesia. The prevalence of convenient online and mobile trading systems fueled a boom in their global stock investing. 

South Koreans have purchased a net $23 billion in overseas stocks as of late 2021, up 15% from the same period a year earlier.

However, India has been left mostly inaccessible for foreign retail investors, despite its rapid growth and handsome returns. Non-residents in India have been required to invest through mutual funds.

The 24% ownership limit for foreign investors in a listed Indian company also put off foreign retail investors. But India removed the ceiling last year.

The Sensex, a benchmark stock index in India, has risen almost 20% over the past year, outperforming the Nasdaq index and S&P 500 index.

By comparison, stock markets in Germany, Hong Kong and South Korea have declined during the same period on concerns over inflation and rising interest rates.

Goldman Sachs forecast the Indian stock market to expand to $5 trillion in market capitalization by 2024 from the current $3.5 trillion.

Mirae Asset’s Indian subsidiary has seen rapid growth in its deposits to 16.9 trillion won ($13.7 billion) as of March 2022, more than five times the 3.3 trillion won in 2017.

Its localization efforts and steady business growth there helped the company earn the trust of Indian authorities. Mirae's Indian subsidiary has only one Korean employee out of its 214 workers.

In India, Mirae offers wealth management for high-net-worth individuals and provides loans to real estate projects and companies, alongside venture capital investments in Indian startups.

Now it is expanding beyond corporate business to boost retail services, launching a mobile stock trading platform dubbed m.Stock.

Write to Tae-hoon Lee at beje@hankyung.com
Yeonhee Kim edited this article.