For retail investors willing to invest in global stock markets, it is becoming easier, thanks to technology. With new age platforms like Stockal, individuals can trade across multiple global stock markets affordably and with flexibility, says Sitashwa Srivastava, founder and CEO, Stockal, in an interview with TNIE. Excerpts:
Can Indian retail investors invest in overseas equities?
Retail investors are allowed to invest in overseas financial markets under the Liberalised Remittance Scheme (LRS) instituted by the RBI. Under LRS, Indian individuals can remit up to $250,000 overseas per year for various purposes, including investments. As per the RBI data, $423 million was invested by retail investors in overseas markets in the financial year 2018-19.
What regulatory compliances should they bear in mind while trading in global stocks?
Key aspects of global investing are related to taxation and capital gains. Indian retail investors are not charged capital gains tax in the US. Dividends from US firms accrued to Indian investors are taxed in the US but not taxed in India because of a Double Taxation Avoidance Agreement between the US and India.
Are retail investors keen on global stock markets?
Investors are looking to diversify their assets, find new opportunities that they don’t have access to in India and hedge currency. This also follows the massive growth in general overseas remittances for things like education for which people tend to save over long periods of time. Average ticket size is about `1.5 lakh.
What has been the trend so far when it comes to investing in global stocks? Is this now changing due to new technology platforms like Stockal?
Investing in global stocks hasn’t been growing much. In fact, it fell about 4 per cent this year. But remittances for travel went up 19 per cent and remittances for education fee rose 77 per cent. Both these and a few other purposes are things that people tend to save and invest for in advance; so, with the right product and platform, global investments will rise. We are launching products that make it easy for people to save and invest money overseas.
We have seen LRS initiations grow to about Rs 1 crore a week on Stockal and expect it to reach about Rs 10 crore a week over time.
How does Stockal fare over existing platforms both in terms of cost and efficiency?
We help clients manage logistics of global fund remittances free of charge. Sending money overseas to invest has largely been an offline process with banks asking customers to visit a forex-enabled branch and submit requisite LRS documentation. Stockal, however, automates and digitises LRS documentation (personalised for every client). Customers also get better forex rates irrespective of the amount they are remitting.
Are your brokerage costs, fee and charges economical over existing platforms?
Stockal primarily works on a subscription model. Clients can use Stockal for a mix of brokerage commissions, annual subscriptions and charges. Subscriptions range between `3,333 and `13,999 per year. Brokerage commissions can be as low as 1 cent per share. Expert portfolios can cost anywhere between 0.1 and 0.4 per cent of the invested assets.
Currently, how many customers do you have?
We have about 4,000 registered clients and signing up about a thousand every week now. We have a pipeline of about 30,000 clients to onboard over the next 12 months. In the last five weeks, we opened close to 1,000 US investing accounts and about $0.5 million has been transferred into US investments.
A bit about expansion plans over the next few years?
We are available to investors in the Middle East and are launching partnerships in the UAE and other GCC countries by December. Now, investors on Stockal invest in the US, but we will add markets like the UK, Germany, Singapore and Japan next year. By 2021, we intend to have investors in the US and Europe invest in Asian markets.