Foreign Portfolio Investors (FPIs) are critical participants in global financial markets, representing overseas entities infusing capital into a country's...
FPIs are overseas entities or individuals who invest in a country's financial assets like stocks, bonds, and other marketable securities, without acquiring significant ownership or control over the underlying companies.
FPIs involve passive investments in financial instruments primarily for short-term gains and liquidity. FDIs, conversely, involve direct ownership or control in a foreign business, focusing on long-term operational and strategic involvement.
FPI flows can significantly influence stock market performance, currency exchange rates, and market liquidity. Large inflows generally boost markets and strengthen the currency, while outflows can lead to market declines and currency depreciation.
FPIs are influenced by global economic conditions, interest rate differentials, a host country's economic growth prospects, corporate earnings, geopolitical stability, and government policies and regulations.
Yes, most countries have regulatory frameworks in place, often through central banks or financial market regulators, to monitor and control FPI activities, ensuring market stability and preventing illicit capital flows.