A few days back Indian stock exchanges resolved to stop feeding data to overseas exchanges dealing in futures of selected Indian stocks. This was apparently done to increase liquidity in Indian markets. Indian markets can stop licensing other exchanges but how they will stop trading of our stock futures by those markets is not explained. Shares of Singapore Exchange Ltd fell in value following this decision. "SGX will develop and launch new India-access risk management solutions to allow global participants in SGX India equity family of derivative products, to execute their investment activities with continuity," said Singapore Exchange. "Whatever the underlying reasons for this extreme step, the move will deal a body blow to India's equity markets," opined M Philipose. "It's an own goal of sorts." Seems that "some investors were staying away from India's financial markets because of high transaction taxes and haphazard regulatory actions". MSCI, which provides indices to various markets, is not best pleased. "The breadth of the restrictions imposed by Indian exchanges is unprecedented in any equity market in the MSCI emerging market series," it said. If it reduces weightage of Indian securities in its portfolio foreign investors may reduce their exposure to Indian markets, resulting in a fall in share prices. So why do it? One reason could be that, by forcing all foreign investors to trade on Indian markets the government will collect more taxes. The other reason is, "By promoting an offshore centre within the country, and now banning overseas exchanges from trading Indian equities, it's a no-brainer that Gift City can end up cannibalising existing markets in Mumbai," wrote Philipose. What is Gift City? It is a financial center at Ahmedabad, promoted by the government of Gujarat, as a tax free zone for a financial center and for multinational businesses. It is no secret that the Prime Minister is from Gujarat, and only the central government can give permission to trade in dollars. To kill off Mumbai as a financial center so as to promote his home state of Gujarat is racist, and detrimental to the whole nation. Singapore Exchange is already discussing transferring its trades to Gift City, with the National Stock Exchange. Meanwhile, trade deficit soared to $16.3 billion in January, the highest in 3 years. To stop the Current Account Deficit from getting out of hand the budget increased customs duty on mobile phones and auto parts. German companies have invested $9.7 billion and created 400,000 jobs, most of it in the automobile industry. Germany has warned of retaliatory action on Indian exports. High taxes, rewarding supporters at the cost of others and banning what they don't like, the BJP is no different from other parties. Aren't we lucky?
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