here’s what can be done

The problem isn’t globalization (London is in the same boat, struggling to grow its stock market) – it’s Americanization. The US dominates more than 60 percent of global stock markets – an increase of about 20 percent since 2008.

Cambridge-founded chipmaker Arm and Germany’s Birkenstock are the latest homegrown success stories to ditch their national exchanges for the premium and prestige of a New York stock exchange.

However, it does not seem unreasonable that large companies incorporated in Australia should still call Australia their home base and list locally. It just takes a joint effort.

The recent success of Guzman y Gomez, which recently hit an all-time high, could tempt future IPOs away from the private markets where all the fun is had, but the task remains to convince potential IPOs considering US listings to to stay. at the home team.

The ASX says there is “no shortage of demand” from companies considering floats. Like a mirage, however, this question seems to move further and further away as we get closer. But now that the rate-cutting cycle has started, the increased certainty on the economic front means that this time it could be different.

“As a capital markets system, we need to do more work on selling the benefits of listing on the ASX versus other exchanges,” said James Posnett, head of listings at the ASX. “There is an opportunity for us to do more and focus on the companies that don’t meet the threshold for the S&P 500 to list here.”

There is no shortage of successful Australian companies that asset managers and retail investors would like to buy, and thanks to our superannuation system, there is no shortage of institutional capital looking for places to put their money.

“An IPO is just tapping into the market once. The ability to raise more money quickly and easily once listed on the stock exchange is very attractive as a company seeks to pursue expansion and growth opportunities,” Posnett said.

Tom Cowan of TDM Growth Partners, the company that brought Guzman y Gomez to the public market, is also a true patriot. “History would suggest that the ASX is a great place to list fast-growing companies and while the US always has an attractive aspect, the benefits of a local ASX listing far outweigh this,” says Cowan.

The co-founders of Atlassian, which listed in the US in 2015, cited the size and maturity of the US markets as the main reasons why the company listed offshore instead of Australia.

Cowan points to a range of perceived advantages of listing on the ASX over the US stock exchanges, including a potential valuation premium, relatively greater media attention, lower costs, a faster listing process and what he calls the opportunity to be “a big fish in a small pond”.

A vibrant and growing public capital market is the basis of a good Western democracy.

If Canva were to choose to list on the ASX, it would immediately take the title of Australia’s largest technology company and fill the hearts of Australian investors with pride, no doubt inspiring others to follow.

However, money talks, and Canva’s valuation is too high, its liquidity needs are too great, and the investor base for US tech stocks is more sophisticated. Listing shares in US dollars rather than Australian dollars makes it much easier to attract talent with equity.

But there are a few tweaks that could make the ASX more attractive. The reality is that we cannot compete with American technological dominance. We need to leverage our strengths in mining and healthcare and rebuild the lost utilities sector for those juicy dividends.

A quick search through my industry contacts turned up an IPO Christmas list of iconic Australian companies that investors would be jumping on, including Bunnings, Kmart, Cotton On, Visy, Hancock Prospecting, Snowy Hydro and Sydney Metro.

“The retail investors and the liquidity you get from listed shares are incredibly powerful, and there is still a large amount of capital available for that,” said David Di Pilla, director of HMC Capital. The Australian Financial Statement.

The London Stock Exchange is facing a similar contraction problem. Over the past two decades, UK-listed shares have risen from 11 percent of the global stock market to less than 4 percent (in Australia it’s 2 percent).

The UK financial regulator has tinkered with regulations, including introducing dual-class structures, where founders’ shares represent greater voting power, in a bid to lure companies back as there has been a significant increase in the number and share of IPOs with a dual-class share structure.

Australia is one of the few markets where dual-class listings are prohibited; perhaps it’s a manifestation of our iconic tall-poppy syndrome, where we eschew the entrepreneurship of the founder-led company.

“We know we are an outlier globally when it comes to disallowing dual-class listings, and this is something we could consider in close consultation with ASIC and the market,” Posnett says.

Of course, there is always the opportunity to cut more red tape and make serving ads cheaper and even faster. The social credibility and acclaim of being public must outweigh the burden of the additional paperwork and governance requirements.

The chairman of Harvey Norman is the latest in a series of founders to complain about the disproportionate demands and red tape required by the ASX to remain listed.

Indeed, it seems unreasonable for a small-cap company to have the same financial reporting requirements as BHP, despite having a fraction of the market capitalization and resources.

Furthermore, according to Cowan, the process by which ‘insiders’ can trade in Australia is flawed, and insiders can only trade within specific windows, which “creates adverse market dynamics and perverse incentives for all participants”, Cowan says.

“There is a very easy solution here: the ASX allowing transparent, written trading plans that articulate a predetermined, planned and automated basis for when buying and selling will occur, as the Americans do, would be a meaningful change.”

A vibrant and growing public capital market is the foundation of a good Western democracy, so let’s back ourselves and make the ASX great again, starting with getting an Australian listing.

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