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Informist, Monday, Oct. 14, 2024

 

--SEBI Narayan: Thinking of a more comprehensive stress test for MFs

--CONTEXT: SEBI whole-time member Ananth Narayan speaking at NSE event

 

HYDERABAD – The Indian financial market has been a consistent return provider over the last many years and particularly over the last five years compared to China, Ananth Narayan, whole-time director of the Securities and Exchange Board of India, said Monday. He was speaking at National Stock Exchange of India's World Investor Week.

 

"There's a lot of talk about China markets over the last few days, but over the last five years, while Indian markets have given around 15% compounded annual growth rate consistently, Chinese markets are nowhere close to that. It's almost zero. In fact, in some cases, like in Hong Kong, it's actually negative," he said in a key note address. "Now, that's not to say things cannot change going forward, but we've had this remarkable return journey with comparatively low risks."

 

SEBI is always trying to reduce the risk for investors, but investors too have to be careful and know what is a good and bad investment, he said. SEBI has asked mutual funds to publish stress test results so that investors can understand the risks. For example, in case there is a sharp reduction, investors should know how many days will it take for any fund to sell stocks in a particular scheme, Narayan said referring to asset value.

 

"We are also trying to do the same exercise across all mutual funds holistically, which means if the entire industry was to see 10%, 15% or 20% redemptions, what do you think will happen in the markets? We don't expect this to happen, but you know these are ways in which you measure the risks so that people are aware of these numbers and then come in and invest openly," Narayan said.

 

As part of investor awareness week, NSE has launched two initiatives – Digital Wisdom Board and Wheel of Financial Wisdom –to improve investor awareness.  End

 

Reported by Narayana Krishna

Edited by Ashish Shirke

 

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