Intangible assets comprise 76% of Indian mkt value

With the stock markets scaling new highs, an average Indian investor has created a record of sorts. A recent study done by Brand Finance Plc, UK, shows that an average Indian investor pays the most for intangible assets-- intangibles are those which are normally absent on the balance sheets such as services, brands and human capital "� of a stock.

According to the study, 76 per cent of the total value of the Indian markets comprises intangible assets against the global average of 62 per cent. The study, conducted across 25 stock exchanges in countries like USA, Canada, Singapore and Brazil.

The exchanges have a combined market value of $31.6 trillion which represents a 99 per cent share of the global market.

Technology, according to the study, attracts the highest proportion of intangibles worth $ 1,480 billion.The global average is 91 per cent while 98 per cent of the technology sector comprises intangibles.

David Haigh, chief executive officer, Brand Finance, said that today there was emphasis on unique value creating assets, adding that technology, customer and market relations had all gained a lot of significance in this scenario.

"In this set up, things like brand valuation becomes even more important as it's not always easy to predict the value of these intangible assets," he said adding that the best assets are those that can be protected under Intellectual Property Rights (IPR) as imperfect legal rights erode the brand value.

Other sectors which scored high on the list of intangible assets were consumer (non-cyclical) at 86 per cent or $4,210 billion, communication at 75 per cent or $2,850 billion and energy at 72 per cent or $ 1,835 billion.

These findings highlight the need for increased importance to capabilities for intangible asset creation as well as a change in investment priorities and return on investment measures.

There is also the need to pay more attention to significant intangible asset creation.