Andrew Sheng

Opinion | Capitalism with a conscience? Social stock exchanges could be the answer

Instead of serving markets, we should have markets serving our needs for a fairer, greener world. Enter social stock exchanges – the institutionalisation of doing good

Reading Time:3 minutes

Why you can trust SCMP

An activist stands in front of the New York Stock Exchange as part of a protest calling for an increase in the capital gains tax in New York, on January 28, 2021. Photo: EPA-EFE

Andrew Sheng

Published: 3:00am, 29 Jul 2023Updated: 3:33am, 29 Jul 2023

The US Federal Reserve has raised interest rates again, but the mood in the stock markets suggests that, after a mild recession, it may be time again for wine and roses. Stock markets globally are at their least volatile in a while – like the calm before a storm.

Meanwhile, scientists are warning about El Nino effects and a possible disruption to the Gulf Stream, which basically takes the warm waters off Mexico up the East Coast of North America to the cooler waters of the Artic Northern Atlantic.

With global warming melting the Greenland ice caps and carbon-rich permafrost, scientists think the Gulf Stream could collapse, with devastating impact on global weather and food production. If food output is disrupted, on top of the reduction in grain and fertiliser exports due to the Ukraine war, expect inflation to roar back, especially for emerging markets.

Financial markets do not seem to factor long-term climate issues into short-term price considerations. This raises the question: who do the markets really serve?

Finance, of course, is a virtual human creation to serve the real economy. But after four decades of global financialisation, it seems the real economy is now serving financial interests. Markets are becoming more concentrated.

A recent study of US foreign accounts found that a big chunk of the multi-trillion-dollar offshore financial markets were held on behalf of a fractional minority – the super-rich who seek to avoid taxation, and have secrecy and anonymity. The recent banking shakeout has also left big banks bigger than ever and the US equity run-up is being led by the “Magnificent Seven” tech stocks.