Infosys (NSE: INFY) (NYSE: INFY) shares are down 8%. INFY fell given the update to predicted revenues for the year - not good, obviously. It's possible to just note the pain being felt by the portfolio of the Prime Minister's wife and leave it at that but there's an interesting little point here which we think is fun. Just how integrated are these global financial markets? For the London quote (LON: 0XSE) seems to be entirely unchanged. As that is the $ ADR, just the same as New York, isn't there an arbitrage there to be exploited?
We all know what Infosys does:“Infosys Limited, together with its subsidiaries, provides consulting, technology, outsourcing, and next-generation digital services in North America, Europe, India, and internationally. It provides application management and application development services, independent validation solutions, product engineering and management,” and so on. It certainly started out as an arbitrage between Indian and global prices for programmer salaries but it's rather gone beyond that now. Indeed, it's a bellwether for the entire sector: “The sharp downward revision in Infosys Ltd.'s revenue growth guidance strengthens the case for an industry-wide washout in fiscal 2024.”
OK, but that's not quite the thing we are interested in specifically here.
Infosys stock price from NASDAQ
So, there is that US quote, there's the Indian one. They are moving largely in lockstep. There's a Frankfurt one as well, which moves roughly in line but with the twist of being quoted in euros. But the London quote is that US ADR, in $, and yet it seems not to have moved. From Google Finance:
Infosys different market quotes from Google Finance
So if the London price isn't changing then there must be an arbitrage, right? Even if the prices are the same right now then they must have been different before?
Except this is, we're afraid, just a construct of how the stock markets report information. Which then feeds through into things like Google Finance. For if we look at the London quote for INFY we see that all the transactions are offbook. This has the rather odd reporting effect that the price does change - and changes pretty much in lockstep with the US - but the LSE itself isn't reporting the price change as a price change.
Which is pretty weird but there it is. That the London INFY price doesn't seem to change is just a result of the way the London Stock Exchange reports the INFY share price. Ah well, shrug.
