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Diversification in times of Market Uncertainty – Conversation with Vinay Bharathwaj, Founder and Chairman at Stockal

15-Apr-2020   Vinay Bharathwaj, Designation: Founder and Chairman, Stockal  

Amid the Covid-19 Outbreak, capital markets are trading close to their 3-year low causing panic and distress among the retail investors; who invest a portion of their savings majorly through mutual funds and stocks. At this juncture, it becomes pertinent to educate and provide the investor with diversification opportunities across different asset classes, time period, industries and geography. A recent addition to plethora of diversifications is through ‘Global Investing’, initiated by Stockal in 2019.

Below mentioned are some of the edited excerpts of interview conducted by analysts, – Lakshay Aggarwal and Vibhuti Sharma at Ken Research with Vinay Bharathwaj, Founder and Executive Chairman, Stockal.

What was the idea behind introducing this unique concept of global investing to Indian investors?

Answer: Capital markets in South East Asian and GCC countries lack in providing diversification opportunities compared to US markets which are more structured and offer ample number of assets classes for diversification. We also analyzed that there is a lot of wealth creation in SEA countries and an opportunity to offer more investment avenues. Through Stockal, we are providing Indian investors an exclusive option to invest in US equities through and easy and streamlined process. Other key benefits offered to Indian investors include portfolio diversification, risk hedging against currency fluctuations and a chance to participate in foreign firms’ growth.

How did Stockal bridge the regulatory gap between US & India before establishing in the Indian markets?

Answer: After facing an approximately two year challenge of multiple rounds of approval to get the prerequisite licenses, we partnered with HDFC securities as our Indian partners and Drive Wealth in US and launched our platform in 2019. Capitalizing on the wide target audience of HDFC securities and their high credibility, we decided to partner with them. However, we are still in the process of expanding B2B2C segment within next 2 months.

Under LRS Scheme there is requirement of declaration letter submission, currently undertaken via offline mode by Stockal. What are your plans on making the whole process digital?

Answer: It is a minor regulatory challenge that we are trying to navigate in partnership with various banks such as HDFC, ICICI etc. We are pretty confident of launching a complete digital platform in coming 2-3 months.

Fractional trading is currently a boom in US & UK. What do you think is holding back its introduction to Indian markets?

Answer: First level challenge is experienced on the regulatory front which is further followed by innovation requirement on part of brokers to introduce fractional trading via their unique products. Above all, the requirement for fractional trading is heavily dependent on market situation and with Indian stocks being cheaper compared to those in US it is currently not the need of the hour. However, for Indian investors fractional trading can only be beneficial in case of thematic portfolios of other countries.

What competition do you see from other discount brokerage players like Zerodha, Upstox etc?

Answer: Competition is bound to happen but Stockal being not only a US based investing platform but a cross country platform; we offer an added advantage of geographical diversification that is generally not offered by any of the discount brokers. Given SEBIs guidelines and mandates, brokers can only offer international stocks trading in partnership with companies like us.  Supplementing this, Stockal is a multi country and multi asset class provider with offerings for all kinds of investors.

What are Stockal’s future plans on adding new products to its portfolio?

Answer: Stockal plans to launch thematic investments in by Mid-April’20. Thematic mode of investment is more beneficial as it offers its investors the option of fractional trading along with a chance to create wide range of themes from US markets such as block chain theme, AI theme etc which is generally not possible in Indian stocks.

Working towards the direction of expansion Stockal recently opened its office in Dubai to cater to its GCC clients and we also plan to open up our offices in South East Asian countries as well and enable an intermingled ecosystem for allowing cross-border investment to and from different countries.

To read the coverage on Financial Brokerage Industry in India, click here.

https://www.kenresearch.com/banking-financial-services-and-insurance/financial-services/india-financial-brokerage-industry-outlook/335268-93.html