19 June 2019

South Africa: What Is the Point of the Equity Market?


The total number of listings on exchanges around the world has plummeted over the past 20 years. Ordinary investors can access half the number of companies they could as recently as two decades ago. This has implications for savers and corporate governance.

The recent Nasdaq listing of plant-based meat company Beyond Meat shot the lights out, with the share opening at $46, almost double the $25 initial public offering price tag, and closing the day at $65.75. This was easily the most successful initial public offering (IPO) of 2019.

Other high-profile, but less successful listings in 2019, include ride-hailing companies Uber and smaller rival Lyft, as well as office communicators Slack, and Zoom Video Communications, social media firm Pinterest and the iconic Levi Strauss. Airbnb and big data company Palantir are expected to come to the market in 2019 too.

This could be a record-breaking year for listings in general, potentially even surpassing the dot-com boom years.

"We think it is possible that 2019 could prove to be a record year for capital raised in the IPO market, at over $100-billion in issuance, exceeding the amounts raised in 1999 and 2000," says Kathleen Smith, principal at investment bank Renaissance Capital....

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