RisingShiningSuperpower
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I pray that Modi-ji will soon wash away the evil of the fake Ghandi family and unleash India's potential and demographic dividend. I'm confident that by 2020, Indian market cap will surpass China's and become the largest in the world.
India lags far behind China in the market cap league - Livemint
India lags far behind China in the market cap league
One of the big stories this week has been the news surrounding Chinese e-commerce firm Alibaba, which launched its initial public offering (IPO) this week. Any other week, it would have been the biggest story just by virtue of the size of the IPO, but this week it was pipped by Apple Inc., which released two new phones, a watch and a payment feature built into its smartphones. But let’s look at the Alibaba public offering.
The IPO, which is expected to raise over $21 billion, will be the largest in the US and will beat Facebook’s $16 billion public offering by a decent margin. It still may be not be the biggest global IPO though. That honour goes to another Chinese firm, Agricultural Bank of China, which raised $22.1 billion via a listing in 2010. According to a Bloomberg article earlier this week, Alibaba is seeking a valuation of as much as $162.7 billion, larger than 95% of the Standard & Poor’s 500 Index.
Each of these numbers are staggering in their own right and even more so when you compare them to India.
Consider this. At an expected valuation of over $160 billion, Alibaba will not make it to the list of top 20 companies by market capitalization in the world. But that list already has three Chinese companies—China Mobile Ltd, PetroChina Co. Ltd and the Industrial and Commercial Bank of China Ltd. Each of these, as of this Wednesday (10 September), had a market cap of over $200 billion.
Pit these companies against India’s top market cap companies; you see just how wide the gap is. Tata Consultancy Services Ltd (TCS) is India’s largest company by market cap and a well-respected global technology player. But it isn’t even in the triple-digit market cap club. As on last Friday, TCS’s market cap was just under $85 billion—making it 108th in the market cap league tables.
India’s next two most valuable companies are Oil and Natural Gas Corp. Ltd and Reliance Industries Ltd, with market caps of $63 billion and $55 billion, respectively. In India, both of these are considered to be oil and gas giants, but each of them is less than one-fourth the size of PetroChina. Needless to say, the lower market cap of these companies reflects the difference in size of the underlying businesses as well.
The comparison in terms of primary markets is even more stark. India’s largest IPO was in 2010, when state-owned Coal India Ltd went public and raised $3.4 billion. Since then, the IPO pipeline has been thin because of the poor market conditions. But even now, as the primary markets begin to pick up, the largest IPOs being reported are in the range of $1 billion from real estate firms such as Lodha Developers Ltd. (Mint does not have confirmation of Lodha Developers’ IPO plans.) That seems almost like pocket change at a time when global headlines are dominated by Alibaba’s $21-billion offering.
At an aggregate level, though, India’s performance is not entirely dismal. The Indian markets are now ranked ninth with a market cap of $1.58 trillion. China is ahead of India but not by the same kind of margin that some of the Chinese companies above have overtaken their Indian counterparts. The market cap of China’s Shanghai Composite Index is just under $4 trillion and it is now fourth in terms of market cap.
The year 2014 has been significant in pushing India up the league tables due to the 27% rise in the Indian equity market so far this year, which has been driven by nearly $14 billion in foreign inflows. This has helped India overtake the Australian and Swiss markets and get into the top 10 club.
What has also helped our performance in this regard is the fact that the Indian equity market is far more open to foreign investors than the Chinese market. Some of this is changing. In March this year, China allowed foreign investors to invest up to 30% in a single company compared to 20% earlier. Over time, this should help push up China’s market cap.
In contrast, the triggers for India’s market cap to rise could be more domestic. Deepening of the markets via increased retail participation and a wider set of listed entities would help. But the underlying driver will be the expansion plans of Indian companies—both organic and inorganic. The statutory warning here is that not all expansion has paid off in the past and chasing higher market cap should never be the reason behind it.
For now though, the market value of Indian corporations lags far behind Chinese peers, just like the Indian economy falls way short of the Chinese economy. So, as much as we like comparing the two Asian nations, there really is no comparison to be made, at least yet.
Ira Dugal is assistant managing editor , Mint.
India lags far behind China in the market cap league - Livemint
India lags far behind China in the market cap league
One of the big stories this week has been the news surrounding Chinese e-commerce firm Alibaba, which launched its initial public offering (IPO) this week. Any other week, it would have been the biggest story just by virtue of the size of the IPO, but this week it was pipped by Apple Inc., which released two new phones, a watch and a payment feature built into its smartphones. But let’s look at the Alibaba public offering.
The IPO, which is expected to raise over $21 billion, will be the largest in the US and will beat Facebook’s $16 billion public offering by a decent margin. It still may be not be the biggest global IPO though. That honour goes to another Chinese firm, Agricultural Bank of China, which raised $22.1 billion via a listing in 2010. According to a Bloomberg article earlier this week, Alibaba is seeking a valuation of as much as $162.7 billion, larger than 95% of the Standard & Poor’s 500 Index.
Each of these numbers are staggering in their own right and even more so when you compare them to India.
Consider this. At an expected valuation of over $160 billion, Alibaba will not make it to the list of top 20 companies by market capitalization in the world. But that list already has three Chinese companies—China Mobile Ltd, PetroChina Co. Ltd and the Industrial and Commercial Bank of China Ltd. Each of these, as of this Wednesday (10 September), had a market cap of over $200 billion.
Pit these companies against India’s top market cap companies; you see just how wide the gap is. Tata Consultancy Services Ltd (TCS) is India’s largest company by market cap and a well-respected global technology player. But it isn’t even in the triple-digit market cap club. As on last Friday, TCS’s market cap was just under $85 billion—making it 108th in the market cap league tables.
India’s next two most valuable companies are Oil and Natural Gas Corp. Ltd and Reliance Industries Ltd, with market caps of $63 billion and $55 billion, respectively. In India, both of these are considered to be oil and gas giants, but each of them is less than one-fourth the size of PetroChina. Needless to say, the lower market cap of these companies reflects the difference in size of the underlying businesses as well.
The comparison in terms of primary markets is even more stark. India’s largest IPO was in 2010, when state-owned Coal India Ltd went public and raised $3.4 billion. Since then, the IPO pipeline has been thin because of the poor market conditions. But even now, as the primary markets begin to pick up, the largest IPOs being reported are in the range of $1 billion from real estate firms such as Lodha Developers Ltd. (Mint does not have confirmation of Lodha Developers’ IPO plans.) That seems almost like pocket change at a time when global headlines are dominated by Alibaba’s $21-billion offering.
At an aggregate level, though, India’s performance is not entirely dismal. The Indian markets are now ranked ninth with a market cap of $1.58 trillion. China is ahead of India but not by the same kind of margin that some of the Chinese companies above have overtaken their Indian counterparts. The market cap of China’s Shanghai Composite Index is just under $4 trillion and it is now fourth in terms of market cap.
The year 2014 has been significant in pushing India up the league tables due to the 27% rise in the Indian equity market so far this year, which has been driven by nearly $14 billion in foreign inflows. This has helped India overtake the Australian and Swiss markets and get into the top 10 club.
What has also helped our performance in this regard is the fact that the Indian equity market is far more open to foreign investors than the Chinese market. Some of this is changing. In March this year, China allowed foreign investors to invest up to 30% in a single company compared to 20% earlier. Over time, this should help push up China’s market cap.
In contrast, the triggers for India’s market cap to rise could be more domestic. Deepening of the markets via increased retail participation and a wider set of listed entities would help. But the underlying driver will be the expansion plans of Indian companies—both organic and inorganic. The statutory warning here is that not all expansion has paid off in the past and chasing higher market cap should never be the reason behind it.
For now though, the market value of Indian corporations lags far behind Chinese peers, just like the Indian economy falls way short of the Chinese economy. So, as much as we like comparing the two Asian nations, there really is no comparison to be made, at least yet.
Ira Dugal is assistant managing editor , Mint.
