Indian Stocks Get First ETF In Gulf Region As UAE Deepens Ties

Elevators travel next to electronic boards displaying stock figures at the National Stock Exchange of India Ltd. (NSE) building in Mumbai, India, on Friday, Dec. 16, 2016. The NSE plans to file a draft prospectus this month for an initial public offering of about 100 billion rupees ($1.5 billion), pushing ahead with the nation's biggest listing in more than six years after its top executive resigned, people with knowledge of the matter said. Photographer: Dhiraj Singh/Bloomberg

(Bloomberg) -- Gulf investors are poised to get their first regional exchange-traded fund tracking Indian equities.

Lunate Capital LLC is launching the Chimera S&P India Shariah ETF, replicating the performance of the S&P India Shariah Liquid 35/20 Capped Index. The fund will track the performance of Shariah-compliant Indian equities listed on the Bombay Stock Exchange.

Indian stocks climbed for an eighth year in 2023 as the country continues to be one of the most favored markets in Asia. The gains were supported by the fastest growth among the world's major economies and persistent investor concerns over the outlook for India's biggest emerging-market rival, China. An informal survey conducted by Bloomberg News showed Indian equities are poised to rise further in 2024.

The S&P India Shariah Liquid 35/20 Capped Index rose 16% last year, although it couldn't keep pace with the Nifty 50 Index's 20% gain. The new ETF is set to include large-cap Indian stocks like Reliance Industries Ltd., Infosys Ltd., and Tata Consultancy Services Ltd., and is open for investor subscription from Jan. 12 to Jan. 17.

There were an estimated 3.5 million Indian expatriates in the United Arab Emirates as of 2021, comprising about 30% of the Gulf country's population. Bloomberg has reported the UAE is considering investing as much as $50 billion in India, its second-largest trading partner. As part of the push, entities overseen by Sheikh Tahnoon bin Zayed Al Nahyan, a member of Abu Dhabi's ruling family, have held early-stage talks on investing billions of dollars in India.

Along with other portions of Sheikh Tahnoon's sprawling empire, Lunate and Chimera Investments will be folded into a new firm called 2PointZero. That firm will be transfered to Abu Dhabi's $244 billion International Holding Co., which is also chaired by Sheikh Tahnoon — one of Abu Dhabi's two deputy rulers, the UAE's national security adviser and brother to its president.

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Among his most recent deals in India, a unit of IHC formed a joint venture with the Adani Group, led by Gautam Adani, to explore artificial intelligence and other technologies.

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