Now you too can own stocks of Amazon, Facebook and Google
Wish to own a stake in FAANG companies, but perplexed how to own the same? Don't worry, our very own NSE and BSE are bringing a solution for you to own and ride high on this Internet craze...
Heard about the common acronym FAANG? It stands for Facebook, Apple, Amazon, Netflix, and Google. All of these have now become a household name and play a key role in our day-to-day lives. But there’s one more thing common about them: Their stock prices have given a compound returns of more than 20% YoY in the last decade. And today these companies constitute a market cap of more than 4 trillion US dollars which is way more than the total GDP of India. Mind boggling numbers these are and definitely make each one of us wish if we could too own these stocks from India. Currently, there are some ways through which we can own these stocks listed in US stock exchanges, however these modes are too complex for common masses to own their dream company stocks. But now the Indian Exchanges have finally risen up to make this long unfulfilled wish of Indians come true and soon you and me will be able to own FAANG stocks in a cheaper and secure manner. Let’s read on to see how:
The 2 biggest stock exchanges of the nation, NSE and BSE are creating special platforms at the International Financial Services Centre (IFSC) through which Indians can invest in foreign shares. This will be an altogether new system getting built in the very own GIFT city of Gujarat which is going to be the new tax heaven in India. Until now, there used to be a high taxation bracket to trade in foreign stocks along with requirement of US brokers to execute orders in their own stock exchanges. The US brokerage firms charge $2-3 as fees per transaction. But with the implementation of IFSC, a trader would be able to save 60%-70% of trading charges because of saving on capital gain taxes and no foreign intermediary requirement.
The process of holding shares is also going to be seamless and hassle free. A financial instrument known as a depository receipt would be issued to the stockholder in India. This instrument would be a representation of the foreign company’s stock held in that country’s demat account only, unlike Indian stocks where the stocks are held with the 2 custodians – NSDL and CSDL. But hey, hey,… even though the stocks would be held in demat’s of foreign countries, the settlement would be guaranteed by NSE and BSE only just like domestic shares. So, in case if there is some fraud or mis-appropriation in share transaction through IFSC, it will be the responsibility of NSE or BSE to make that right. Investors will also be entitled to dividends and participation in bonus issues and voting rights which until now through other modes wasn’t possible. Sounds like heads and tails, both are in the hands of the Indian investor. 😉
Now, one may have a logical question that US stocks are so expensive. It would be difficult to own even 1 stock of most of the companies like Amazon whose single stock costs a whopping 2.5 lakhs in Indian currency. So on this too, not to worry much… NSE is trying to design its platform in such a manner that will allow investors with a ticket size of as low as $2-3 (Rs150-225). This will be Fractional ownership where shares are divided up by market makers to lower the minimum ticket size and it is already a popular product in the US. Wonder why doesn’t SEBI allows this for Indian companies like MRF! Would definitely increase the retail participation of Indians into the stovk market.
All things apart, this definitely is a great move coming at a time when Indian interest in foreign equities has seen a sharp inclination. Equity listings of Doordash, Robinhood and Coinbase had garnered a lot of interest from Indians. Waiting eagerly now to get this IFSC facility live so we too can flaunt ownership of Google or Amazon stock. And please don’t forget to subscribe our newsletter if you haven’t till now to stay updated with such interesting happenings of the finance and marketing world:
By: Anmol Gupta | Isha Garg