The country?s stock markets are under-penetrated and there are enough opportunities to increase the market reach and impart financial knowledge, according to a survey released on Thursday.
The survey showed that majority or 80% of respondents believe that stock market industry will benefit from competition, while over half or 57% think that competition among the exchanges will lower cost of participation.
?Indian Equity Investors Survey 2010? report was released here by MCX Stock Exchange and was conducted by The Nielsen Company.
?This survey provides evidence that financial literacy, investor awareness and more competition will be crucial for India’s inclusive growth going forward,? MCX-SX MD & CEO Joseph Massey stated. The survey also showed that retail investors in the world’s fastest growing telecom market, preferred mobile phones to trade in the market.
It also shows that in mature markets such as the US, there is no single exchange that has more than 50% market share, while in Europe it is below 25%.
However, in India, the National Stock Exchange commands 92.5% market share, which is very high compared with international standards.
Despite India witnessing huge success in the life insurance and telecom sectors, the presence of just two exchanges do not bring sufficient ?trading and financial inclusion opportunity to the Indian public?.Hence, the potential in releasing the funds available in the banking and asset management sectors in the Indian economy to the exchange traded space are immense, the survey said.
In India, 65% of the equity cash market turnover is generated from Mumbai and Delhi even as these cities account for only 24% of the national income pool. As a result, this imbalance offers a huge opportunity to unlock value, the report said.Citing an example, India?s corporate bond market as percentage to GDP was just 3% in 2009 compared with Malaysia (43%), Singapore (34%) and Hong Kong at 35%. Only 18% of those surveyed of the urban, informed segment, invested directly in equities.
The fact that only 50% of those surveyed were never approached by brokers or investment advisors, presented an opportunity to expand market reach. Nearly 94% of the retail respondents have shown willingness to attend financial training programmes if offered in their vicinity, the report said.
The survey vindicates the fact that financial literacy, investor awareness and increased competition in stock exchanges will be vital for India?s inclusive growth going forward.
?We have been able to estimate the level of desire and understanding on the part of the retail and institutional investing public for financial inclusion and development in the equity markets,? said Ranjan R Chakravarthy, head, research and product development of MCX Stock Exchange.
The survey of retail and institutional investors conducted by the
Nielsen Company is the fourth major nationwide exercise and the first such effort by a stock exchange in India, MCX-SX said.
