Start of a new era at MCX

The recent appointment of two new board members of MCX is beginning of a new phase of growth at MCX. Both board members, Mr. Amit Goela and Ms. Madhu Vadera Jayakumar, are representing superinvestors, Rakesh Jhunjhunwala and Radhakishan Damani. This development has come at a right time just before SEBI starts regulating commodity markets. All we can say is that the MCX story is very much intact and will take time to pan out but is moving in the right direction. We continue to support our thesis of investing in MCX for long term.

On the other hand, CME will provide technical and strategic support to MCX from time to time. It is a no-brainer that some time in the future, CME will either buy 15% from Kotak or from some other investor that would like to exit MCX.

Finally, the fear of competition from BSE and NSE is overblown. Maruti returned more money to its investors when its market share hit 45% as compared when its market share was 80% before new entrants. Again, as pie gets bigger, the size of a single slice will be way bigger than the original pie. MCX will definitely lose market share in next 10 years but it will have 50% market share of a 10 lakh crore market (transaction volume) as compared to 87% share of a 1 lakh crore market. Think big!


Alibaba Jack Ma hit back!

Below are some highlights from Jack Ma’s recent interview on current state of Chinese’s economy and how US is obssessed with it. Jack Ma sounded usual confident and there is lot of truth in his words.

“People say ‘Well you know the economy’s bad, so China consumption will be low.’ No, totally different, You Americans love to spend tomorrow’s money, and other people’s money maybe. … We Chinese love to save money.”

“We’ve been poor for so many years: When we made money we put it in the banks because someday we know that disaster is coming so we can spend the money. When the economy is bad, we still have the money to spend — you guys probably don’t, you worry.”

“China’s government is so strong on investment, so strong on exporting, but they’re too weak on domestic consumption. In the past 20 years, government is so strong, now they’re getting weak: It’s our opportunity, it’s our showtime to see … how we can develop real consumption here.”

“When we export we have a terrible sky, we have terrible water, we have a terrible environment — when we start to import we’re going to be better. So that’s all a great opportunity, guys, be happy about that.”


Insights from the ultimate wealth and jobs creator

The reinvention of MCX

Warren Buffett once said that you should invest in a business so simple and durable that even a fool can run and still make money,  because someday a fool will. And the live example of this is MCX. At one point of time it was run by a fool or a crook, Jignesh Shah and did exceedingly well and now no one is running it and it is still doing well and will continue to do well. The recent article in Forbes India is a good indication of the strength of MCX’s business and the importance of its relationship with CME. Read more here


MCX – CME MOU just made MCX’s moat stronger

Chicago based Chicago Mercantile Exchange (CME) is a $30 billion giant offering global commodity trading platform. CME is known for innovating new financial products such as weather based options, interest rate contracts etc.

CME has a long standing relationship with MCX since 2006 which just got strengthened with the license renewal and a memorandum of understanding (MOU). The MOU will provide MCX with more options to create Options market.

MCX can now enter currency derivates (a huge market potential) as well as expand upon commodity derivatives using CME’s expertise. All these advantages add up to provide a stronger moat for MCX investors.

MCX and CME will also work together to leverage advantages of India’s international finance center called GIFT City in Gujarat.

Long term investors looking to build wealth over the next decade therefore cannot ignore MCX.


Happy investing!