September 15, 2011

Shares of Stock Exchanges - Their Listing - Satyakam Mishra

Stock Exchange Listings – Just a fairly Tale

Mr. Dharawat writes that shares of BSE, NSE, and other regional stock exchanges will once again be in fancy very soon. 

Can Mr. Dharawat can kindly elaborate which regional stock exchange is currently fancied or will be begin to get fancied. The finances of most them are in tatters. DSE is yet to start functioning despite numerous assurance and promises for past two years.

BSE stake sell was at Rs 400 and now is available at Rs 200 or less, similarly DSE was valued at 140 per share while it issued stake and now is available at Rs 20-30. Price Waterhouse reported CSE with Intrinsic Value at Rs 6100 but the shares available at less the Rs 1900 now.

The main income these stock exchanges are generally from the bank deposits and rental income and nothing from trading. Personally I don’t see the reason for countless stock exchanges when two efficient ones can do the wonder.

I don’t want to sound like a hell’s angel, so though the listing of stock exchange harbors well for the market but I don’t perceive any of them listing in near future except few of them.

While on the other side, in a move that has stirred a controversy, the now-moribund Delhi Stock Exchange (DSE) has paid Rs 11.37 crore upfront to three media organisations — Television Eighteen India Ltd (TV18), New Delhi Television Ltd (NDTV) and Bennett Coleman & Co Ltd (BCCL) towards advertisement services over the next three-five years. In its annual general meeting on September 30, some prominent shareholders of DSE doubted the need for paying the amount upfront to the media outfits especially when there has been nil trading for the last five years on the exchange.  So we have dreadful corporate governance at them and since most of the broker members are the directors in the Board, they siphon off money from the companies.

Jignesh Shah-promoted Financial Technologies (part owner of MCX), had picked up a 5 per cent stake in DSE and was also been roped in as a technology-cum-business partner. It was awarded a contract to start an online trading platform for DSE but we are yet to see that starting corporate governance level at the DSE.

All the exchange hopes to start and plans to apply with capital market regulator, Sebi, for starting an exclusive exchange for small and medium enterprises but on ground we see no activity.

Moral of the Story: Be realistic and do not aim to sound akin to the Pied Piper of Hamelin. For the Un-initiated with the folklore about the Pied Piper of Hamelin

Merriam Webster definitions of Pied Piper of Hamelin
1.     a charismatic person who attracts followers
2.     one that offers strong but delusive enticement
3.     a leader who makes irresponsible promises

Disclaimer: I personally hold stock of Ahmadabad Stock Exchange, Delhi Stock Exchange, Calcutta Stock Exchange, Bombay Stock Exchange, Bangalore Stock Exchange, Madras Stock Exchange and MCX and have seen fall in valuation in each of them. But that should not prevent someone from making their individual investment call.

Satyakam Mishra

1 comment:

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