IBM projects India's financial mkts at $17 trillion

MUMBAI: India's financial markets size was estimated to race from under $1 trillion to 17 trillion by 2025 as globalisation led opportunities shift from veteran markets to emerging markets, a IBM study said.

As per the study 'Get Global Get Specialised or Get Out,' in future, growth opportunities for the financial markets would come from new areas, as firms would find it difficult to grow revenue in the veteran markets where rivals would compete for a depleting opportunities.

"India's financial market size will grow from under one trillion dollar in 2005 to $17 trillion by 2025 with over 17 per cent compounded annual growth rate," associate partner IBM Institute For Business Value Wendy Feller told media.

"However, India lacked some of the market sophistication like underdeveloped infrastructure and one of the highest ratios of public debt to GDP that can be a stumbling block which can hinder and halt further globalisation," Feller, who headed the study said.

India has only 17 major airports compared to 189 in the US and 56 in China, it produced just one-quarter of the kilowatt hours of electricity that China does, IBM said.

India has had one of the highest ratios of public debt to GDP of 80 per cent in 2005, 11 per cent above the second highest ratio of 69 per cent for Turkey and much above the 46 per cent average ratio across the 14 emerging markets.

For a robust financial market, economies require a communication technology infrastructure and here India (3.1) ranked ahead of China (2.6) on a one to five e-readiness scale but below worldwide e-readiness of 3.27.

"Worldwide investable assets are expected to double by 2015 to almost $300 trillion and by 2025 the opportunity quintuples to nearly $700 trillion," the study said.

"However, 60 per cent of this future growth is coming from non-traditional places, while veteran markets will remain large, these newer markets could soon have asset bases that rival those of their long-standing peers," it added.

IBM Global Business Services conducted a study comprising of 35 countries in terms of largest GDP to know where asset would reside in future. The survey included views of 955 professionals of which 848 were financial markets executives from around the globe and 107 of their corporate clients.

In 2006, China surpassed London and New York in initial public offering (IPO) listings for the first time. In the same year deal value of China's three largest exchanges - Shenzhen, Shanghai and Hong Kong totalled $53 billion, surpassing London at $48 billion.

Many of the respondents believed that in less than 20 years market centres such as Mumbai, Dubai, Shanghai, Hong Kong, Shenzhen could become as dominant as New York, London and Tokyo.

The nature of the financial markets industry was changing with globalisation and to lead the worldwide playing field, firms should focus on those areas of the business that matter most to their clients, the study said. Executives surveyed believed that being the best in every niche of the industry is getting increasingly difficult and costly.