Illustrating De-equitisation

In August 2020, there were 1,891 * companies listed on the Australian Stock Exchange (ASX), the lowest amount since May 2007.

Which is 7% less from the 2,026 record high of February 2018.

This figure would be drastically lower if we exclude over 200 ETF’s and 100 Listed Investment Companies (LIC’s).

And what if we consider the 1,324 listed entities (61% of the total*) with markets caps below $100 million ?

One-third (733) of the companies have market capitalisations below $25 million)

Incidentally, the lowest amount of companies listed over the past 18 years was 1,341 companies which was in March 2002, which is when my data ends.

The de-equitisation story is intact and made acute when an enormous amount of money is chasing fewer opportunities.

And Australia has the world’s 4th largest pension system with $2.1 trillion in savings.

Albeit, fiduciaries and managers in the superannuation world do allocate them globally, home currency bias and local currency obligations does favour a steady flow towards the ASX.

* there are 2,167 listed entities in total which includes foreign equity issuers including those comprising a stapled group along with wholesale & retail debt issuers.

October 9, 2020
by Rob Zdravevski
rob@karriasset.com.au