DailyPost 2331
INTERCONNECTED MARKETS / UNCONNECTED REGULATORS?
The growth of international trade, businesses crisscrossing countries, international supply chains, currency strength / volatility, the nature of world finance, flow of investments worldwide, global companies and other connected reasons have made markets worldwide interconnected. That is the true nature of business and finance the world over in the third decade of the 21st century. Anybody country or organization trying to gloss over this fact, would be working against its interests for sure. What impacts have global financial events have made on India and other countries are well known, may it be the recession of 2008 or the current recession, and any number of financial events in between.
The interconnectedness of the markets manifests themselves regularly, which has been witnessed any number of times during the COVID times, recent examples of semiconductor fab companies would not be out of place. The impact of the wheeling dealing of the Chinese construction giant started being felt when it started stumbling on its debt obligations. It was about to snowball into a massive financial crisis. Markets are interconnected because business are interconnected. You may remember the Huawei ban story and also the recent one on the advanced chips equipment and advanced chips to China. All necessarily reflects in the stock markets.
Last year around this time, the attack on Ukraine, showed how much the stock markets could tumble. That markets works on sentiments is an old story and any major trigger makes one believe that we are really sitting on a pack of cards. What is to be borne in mind that there are any number of organizations; banks, financial institutions, ratings agencies, trading firms of different types which keep a tab on the market. Large number of economists and market experts; free lancers and otherwise, do their job diligently. There are any number of research organizations of which one has shot to fame in India recently for its revelations against the Adani Group. Research organizations also work for a variety of reasons.
Having a knowledge and tab on market intelligence and corporate governance is the role of market regulators. It might be the Central Bank of the country or SEBI type organizations, in different forms and shapes across the globe. While the markets are intensely connected, so are the businesses, rating agencies, business market intelligence, stock exchanges indirectly are all interconnected and share information, data and intelligence on a dynamic and real time or depending on the business requirement. To keep on all this and regulate the markets in the interest of the national economy and the investors is a tall order. The interconnectedness of the regulators worldwide, and their interface with business and market intelligence is the first step to a better regulator-controlled market regimen. Regulators collaboration worldwide on parameters that decide the health of the market is a must for a healthy economy. Is the regulator not accountable for the market? Is corporate governance a paper Wizkid.
MARKET REGULATORS ALSO NEED TO BE REGULATED.
Sanjay Sahay