Seize The Global Moment India! Start By Listing NSE Abroad.
Why imprison a global bellwether institution whose credentials are unimpeachable, whose potential is immense, asks Raghav Bahl.
Two thousand and twenty-two AD shoved the global economy into a deep funk. Excessive ‘Covid-19 cash’, inflamed by Russia’s invasion of Ukraine, created a flagellation reminiscent of the post-Lehman subprime crash of 2008. While economic fundamentals are nowhere near as ravaged, the sense of doom is comparable.
Just look at what India weathered until mid-year. Foreign investors pulled out $30 billion from our stock markets, causing them to plummet by 15% in six months. The rupee aged to an octogenarian, touching 80 to the U.S. dollar, even as RBI threw a sink of $80 billion in defending our ‘proxy national pride’, i.e. a strong rupee.
But this meltdown is a pretty sight compared to the horrors playing out at the dizzying intersection of digital and millennial assets. Cryptocurrencies like Bitcoin and Dogecoin are at a quarter of their peak values. The carcasses of much fancied ‘unicorns’, whose market values soared even as losses plumbed new depths, lie strewn in a financial graveyard. Zomato, PayTM, Policy Bazaar, Nykaa, CarTrade, you name ‘em, have destroyed from a third to four-fifths of investors’ wealth. The toxic icing on the ‘cake’ is skyrocketing inflation, high interest rates, shrinking trade and capital flows, all amidst a pervasive global gloom.
In short, t’was a perfect storm from January to June. While July brought some respite from unrelenting crises, it’s a blip whose strength is questionable. It’s just too early for the world to relax or celebrate.
But it’s not too early for India to seize the moment, to build on the creeping optimism and sentiment that “India may, perhaps, be the least affected large economy in this mayhem”. That’s correct. By almost any count, we are sitting prettier than many peers—okay, most of the good news is trapped in our formal, corporate economy, with the rural and informal sectors still struggling—yet this is one heck of an uncommon circumstance. It doesn’t happen too often that we can be the world champions of an economic recovery. So, we must build on the tempo, put all our assets on display, strenuously sell our opportunity – and of course, trot out all our crown jewels to dazzle a cynical tribe of investors.
While there are many stories to tell, I will fasten on to a sure-shot winner, a real thoroughbred. But it’s a crown jewel that we have cruelly hidden in plain sight.
Yes, you have perhaps guessed it by now. I am talking about the National Stock Exchange of India, the much-pilloried NSE.
For the naysayers, let me give just a few objective data points:
It’s the largest derivate exchange globally, bigger than NYSE, Nasdaq, London, Hong Kong and Shanghai.
At about $3 trillion, it’s the ninth largest by the market value of listed companies. Just imagine the blue skies it could soar to, since barely 5% of India’s GDP is captured on NSE, as opposed to over 50% in the U.S. So as India’s economy expands and formalises, NSE could grow tenfold in value!
It’s prodigiously profitable. It operates at over 75% margins, with profits compounding at over 50% for two previous years. It’s given a dividend of Rs 42/share. It commands a 90% market share, and over Rs 2 lakh crore, or $25 billion, of market capitalisation.
It’s a world-beater in digital technology, a pioneer of dematerialised transactions, with perhaps the shortest and most secure trade settlement cycle on earth.
I can go on and on, but the point should be irrefutably clear – in NSE, India has created an institution that has led the world in innovation. Unfortunately, we can’t say that about too many homegrown champions, but when it comes to NSE, we cannot be challenged. We’ve got an astonishing winner here. Period.
It’s not my case that sinners should be pardoned just because they’ve created excellence. No sir. By all means, let the law punish those who have broken it. But why punish an inorganic institution, which cannot conceivably have any mens rea’ People commit crimes, not organisations.
Especially when later leaders have cleaned up the mess that may have been created by a few executives, who are now facing prosecution and their own fate. Let the judicial process go forth unhindered for them.
But again I ask – why imprison an institution which is a global bellwether, whose credentials are unimpeachable, whose potential is immense?
In any case, who are we fooling? NSE is virtually listed, with a shareholding base of nearly 4,000, a majority of whom are high net-worth individuals. Its shares are quasi-liquid and get rapidly exchanged on non-market platforms. So why live in denial? Why not bring that which is happening off the counter on to a regulated, recognised platform?
But if our policymakers are still squeamish about exposing ‘vulnerable’ retail investors to ‘unquantifiable risk’, if they still want to nanny the rush of first-time millennial punters, then so be it.
If anything, this shall be a win-win, with several billion dollars flowing into our economy. More importantly, it shall exacerbate the buzz around India’s promise.
So, why have we shackled NSE, a ‘raging bull’ in stock market terminology, inside a regulatory penitentiary?
PS: Full disclosure - I own a few thousand shares of NSE.
Raghav Bahl is Co-Founder – The Quint Group including BQ Prime. He is the author of three books, viz ‘Superpower?: The Amazing Race Between China’s Hare and India’s Tortoise’, ‘Super Economies: America, India, China & The Future Of The World’, and ‘Super Century: What India Must Do to Rise by 2050’.