Investment Ideas

Investors need to identify the financial goals throughout life or for the next 10 to 15 years depending upon the time horizon selected by the investor, and prioritizing them. Investment Planning is important because it helps in deriving the maximum benefit from the investments.

Success as an investor depends upon his investment in right instrument in right time and for the right period. This, in turn, depends on the requirements, needs and goals. For most investors, however, the three prime criteria of evaluating any investment option are liquidity, safety and level of return.

Investment Planning also helps to decide upon the right investment strategy.… Read the rest

FII flows into a country are associated with several advantages and disadvantages.

Advantages

• Enhanced flows of equity capital
• FIIs have a greater appetite for equity than debt in their asset structure. The opening up the economy to FIIs has been in line with the accepted preference for non-debt creating foreign inflows over foreign debt. Enhanced flow of equity capital helps improve capital structures and contributes towards building the investment gap.
• Managing uncertainty and controlling risks.
• FII inflows help in financial innovation and development of hedging instruments. Also, it not only enhances competition in financial markets, but also improves the alignment of asset prices to fundamentals.

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Demutualization of stock exchanges implies that a mutually owned stock exchange is converted into a company owned by shareholders. In other words transforming the legal structure, of an exchange form to a business corporation form is referred to a demutualization. The ownership, management and trading is separated and are in different hands. They are clearly separated like a commercial entity. The management of the exchange is separated from the shareholders and the brokers.

Need for demutualization:

• Stock exchanges owned by members tend to work towards the interest of members alone, which could on occasion be detrimental to rights of other stakeholders.

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Demutualization refers to the conversion of an existing non-profit organization into a profits-oriented company. In other words, an association that is mutually owned by members converts itself into an organization that is owned by shareholders. The company can take different shapes and forms, that is, it could be either a listed or unlisted company which may be closely held or publicly held.

Demutualization of stock exchanges involves the segregation of members’ right into distinct segments, viz. ownership rights and trading rights. It changes the relationship between members and the stock exchange. Members while retaining their trading rights acquire ownership rights in the stock exchange, which have a market value, and they also acquire the benefits of limited liability.… Read the rest