Mumbai: Morgan Stanley expects to more than triple its clients at its India wealth management unit over the next four years as the US money manager ramps up operation to tap the country’s growing rich.
Himanshu Bhagat and Amitava Neogi, both executive directors at the Indian private banking unit, said a stock market surge and rising optimism about a global recovery have helped attract nearly 300 clients since launch last September.
“We target to get around 1,000 client families over the next 3-4 years,” Bhagat said.
India is fast emerging as a magnet for global wealth managers because of its growing economy and rising income of a middle class that is larger than the population of the United States.
Canara Robeco Asset Management estimates India’s middle class at more than 400 million people.
Consultant Celent forecasts Indian wealth industry to manage about $10,00,000 million worth of assets by 2012, an opportunity that has attracted the likes of Barclays, Societe Generale and Credit Suisse.
Morgan Stanley’s private banking unit has 100 staff in India, including 36 relationship managers across four cities like Mumbai and New Delhi. It hopes to hire more than 50 people in the next three years.
“We are continuously hiring,” Bhagat said.
The firm is also advising clients to buy foreign equities to diversify globally, a trend yet to pick up in India even though local regulations allow each individual to invest up to $2,00,000 overseas every year.
“There are emerging frontier markets like Vietnam, Sri Lanka which they should be looking at. There are also distressed opportunities in Europe and the US We are advising our clients to evaluate this option,” Bhagat said. Morgan Stanley hopes to offer onshore wealth management services in Vietnam and China to boost Asia presence.
India’s main stock index has surged almost 90% from its 2009 trough hit in early March, powered by nearly $9,000 million of foreign fund inflows.
“We are overweight on Indian equity in our model portfolios and urge our clients to buy on the dips,” Neogi said.
Better quarterly earnings have improved the case for India investment, he said, adding the market was nearly at 2003 levels after. Foreign funds that had whittled down their India holding to meet redemption pressures were now keen to build up exposure.
Bhagat said Indian clients were now more willing to take risk after a revival in markets.
The industry had suffered a blow last year as the number of rich in India fell by nearly a third to 84,000, the fastest drop in the world after Hong Kong, after a record 52 percent fall in local shares hurt the net worth of individuals.