It's the US elections, stupid!

The sharp drop in stock prices has taken everyone by surprise. While concerns over global economic health remain, experts are assigning different theories to the fall. One such theory pins the blame on Presidential elections in the US.

In the past two decades, the markets have been through huge turbulence in a year when there have been US elections, says a study conducted by domestic broking firm Antique. "The results have been stark - in election years the returns have been more favourable when the incumbent party wins, while being depressed when there is a change in power."

Lack of Asba hits retail participation

Concerns raised by the investment banking community are turning out to be true, as the compulsory scheme of the Application Supported by Blocked Amount (Asba) has made a dent in retail participation in initial public offerings (IPOs). Comparing recent successful IPOs point towards a sharp drop in retail applications.

 

TeamLease Services' IPO, which was subscribed 39 times, saw only 300,000 retail applications. The similar-sized IPO of Dr Lal PathLabs had seen about 500,000 applications and the IPO was subscribed 33 times. Bankers say making Asba mandatory was necessary to shorten the IPO timeline to a week and systems are gradually adapting to the new framework.