SpaceX's $75-billion stock listing in the US on Friday shattered several records. With a valuation of $1.77 trillion, the reusable rocket company surpassed Saudi oil company Aramco’s 2019 public offering as the world’s biggest and made its largest shareholder Elon Musk the world’s first trillionaire. Two other American tech giants—Claude maker Anthropic and ChatGPT maker OpenAI—filed for IPOs this month and are likely to tap the market later this year with valuations of over $1 trillion each.
Such significant fundraising comes when India and several other emerging markets are witnessing persistent foreign capital outflows. India’s IPO market is also buzzing, but as a Reuters study showed, rather than raising funds to expand markets, the rush is about repatriating dollars. For example, Hyundai Motor and LG Electronics raised about $5 billion in India through secondary offerings and, for each dollar they raised, more than $59 went out of the country.
SpaceX’s investor rush may be a defining moment for global capital markets, but that is in stark contrast with India. While advanced and some Asian markets are riding the AI and semiconductor bull run, India is in a bear territory due to the notable absence of AI and chip firms. This, along with valuation concerns and weak earnings outlook, dragged Indian markets down to the seventh place in just one fortnight. If South Korea surpassed the NSE’s $4.85-trillion market cap earlier this month, Taiwan overtook it last month. Even last year, India’s market cap was roughly 3.5 times South Korea’s and more than twice that of Taiwan. Thanks to subdued earnings and persistent outflows, the Nifty50 and Sensex have lost 10.1 percent and 12.5 percent, respectively, this year and continue to slide.
The other view is that India cannot be compared with Taiwan and South Korea. Just one company—TSMC—dominates Taiwan’s index with a weightage of over 35 percent, while Samsung Electronics and SK Hynix together constitute over 35 percent of South Korea’s benchmark index. In contrast, Indian blue-chips like Reliance Industries and HDFC Bank comprise less than 10 percent each. That said, it’s undeniable is that our investment rates are low and the labour-intensive manufacturing sector is stagnant. To realise India’s potential, its economy must evolve to ensure that key growth levers like consumption and investment can withstand geopolitical uncertainties.