Global Hedge Funds Flock to India: Citadel and Dymon Asia Lead the Charge

Last Updated on October 27, 2023 by SPN Editor

Global hedge funds from across the globe are increasingly shifting their focus towards the Indian market, which was previously somewhat overlooked. The appeal of India’s deepening financial markets, growing liquidity, and its role as an alternative to investing in China has become irresistibly attractive.

Leading this trend are firms such as Dymon Asia Capital, a Singapore-based multi-strategy hedge funds, and Citadel Securities, one of the world’s largest market-making entities. Despite initial concerns regarding tax issues and short-selling restrictions, these funds, among others, are eagerly entering India’s thriving financial sector.

The attraction to India lies in its abundant economic opportunities, a pool of local talent, and a stable regulatory environment. Notably, India’s stock market valuation has doubled in just three years, making it a viable substitute for China in global investment portfolios.

Citadel Securities, in particular, is rapidly expanding its presence in India, with ambitious plans to hire additional investment professionals and engineers for its international equities team. The firm’s market-making arm is also establishing a strong local presence.

Quantitative funds are joining the movement, with hedge funds Gao Capital, based in Singapore with approximately $100 million in assets under management, setting up infrastructure to engage in derivatives trading within the Indian market.

Larger global quant funds like Tower Research from New York and Optiver from Amsterdam are also expanding in India, as indicated by industry sources and LinkedIn job postings.

While the influx of global hedge funds presents substantial potential, it does come with challenges, including navigating regulatory requirements, tax implications, and ensuring adequate liquidity. Nevertheless, India’s growing market and economy continue to captivate investors in search of diversification and growth opportunities.

Prashant Kothari, Senior Investment Manager at Pictet Asset Management, highlights a remarkable trend: foreign investments in Indian stocks have surged to approximately $6 billion this year, constituting over 50% of the total net inflows into the global stock market.

Key sectors such as energy, defense, technology, and pharmaceuticals are expected to reap the rewards of this substantial capital influx.

Sachin Kewalramani, Portfolio Manager and Head of Asia Fundamental Equities at Citadel, expresses the firm’s intent to bolster its international equities team by recruiting more investment professionals and engineers from India. He notes that India’s market possesses all the essential elements to continually attract significant investments, underlining the nation’s irresistible appeal to global investors.

Citadel Securities, a prominent global market maker, is rapidly expanding its presence in India, with a dedicated team of 10 experts in Gurugram established just last year. Beyond traditional stock picking, hedge funds with quantitative strategies are increasingly drawn to the Indian market, recognizing its potential for lucrative opportunities.