India's Missing Investors
Ordinary Indians haven't benefited from an equity boom.
Photographer: Santosh Verma/Bloomberg NewsIf Prime Minister Narendra Modi has delivered one thing in his first ten months in office, it's been electricity to India’s stock markets. India’s benchmark Bombay Stock Exchange (BSE) Sensex recorded a 31 percent jump in 2014. Only the insane runup in Shanghai's bourse -- up 90 percent in the past 12 months -- has overshadowed the Indian rally.
Unfortunately, very few actual Indians stand to benefit from the boom. The proportion of retail investors in India’s equities markets is strikingly low. Less than 1.5 percent of the population invests in securities, compared with almost 10 percent in China and 18 percent in the U.S. Just 2 percent of India’s household savings are exposed to equity; in the U.S., the long-term average is 45 percent.