Invest
Strong gains not enough to stop 4-year low
Strong performance from the IPO market in 2019 was not enough to bring companies or investors to the party, with the number of options for investors falling to a four-year low, suggests an industry expert.
Strong gains not enough to stop 4-year low
Strong performance from the IPO market in 2019 was not enough to bring companies or investors to the party, with the number of options for investors falling to a four-year low, suggests an industry expert.
HLB Mann Judd partner Marcus Ohm explained why, following a number of high-profile failures to float, it is not all doom and gloom for investors.
The small-cap investor noted that while the year was notable for the number of IPOs that were shelved or withdrawn, those that did list performed well.
“The pulled float by Latitude Financial, and others including Retail Zoo and Onsite Rental Group, highlighted some of the challenges of going public, but overall in 2019, new entrants performed well, particularly compared to the previous year,” Mr Ohm said.
“The average year end gain across all companies was 34 per cent, and the average first-day gain was 24 per cent.
“On average, new floats outperformed the market generally, with the All Ordinaries increasing [by] 19 per cent in value over the year.
“The small cap segment performed particularly well, recording average increases of 47 per cent compared to initial listing price.”
Mr Ohm believes Australian investors are looking for quality, with talk of the small cap model being broken an “extreme view”.
He explained: “This comment about the small cap model being broken, it wasn’t broken in the first part of 2018 when a lot of small caps were listed, and it wasn’t broken the year before.
“People are just looking for return elsewhere; people are being rational investors.”
Rather than the model itself being broken, the investor believes Australian investors are sophisticated, with IPOs needing to show value to investors.
“There seems to be less appetite to put money into speculative investments,” Mr Ohm said.
Mr Ohm believes there are a number of factors making markets “jittery” at the moment, including high valuations, geopolitical issues and even the coronavirus.
Looking ahead to 2020, Mr Ohm suggests the IPO market is set for a subdued start to the year.
“Only 13 companies had applied for listing to the ASX at the start of 2020, down from 17 the year before, and significantly down from 37 at the start of 2018,” Mr Ohm said.
“Materials stocks make up the majority of the proposed listings, with six listings, and it will be interesting to see how this sector performs in 2020, considering its muted performance in 2019.
“It is also noteworthy that there are no proposed IPOs of any significant size. Overall, the pipeline is soft and reflects the challenging conditions in the IPO market at present.”
About the author
About the author
Shares
Rising rates set to kill ‘unicorn investments’
Shifting economic strategy post-COVID-19 will lead to rising interest rates, causing the death of “unicorn investments”, an industry expert predicts. ...Read more
Shares
The surprising poster child for ESG investing
Investors looking to have the most impact on the world should not simply follow ESG values, but instead focus on companies that will be needed in a “post-carbon world”. ...Read more
Shares
5 tips to turn down the noise and stay focused as an investor
A surge in financial information, opinions and a natural inclination to focus on the negatives is leading to poorer short-term outcomes for investors, which is impacting long-term results, an economis...Read more
Shares
Why investors should expect modest returns this financial year
Regardless of the investment type, the highs of the 2020-21 financial year are unlikely to be replicated over the next 12 months, an industry expert has warned investors. ...Read more
Shares
Are ETFs and REITs a way for young Australians to build their stake in the property market?
Fractional property isn’t the only low-cost route into Australia’s property market jockeying for attention from younger investors. ...Read more
Shares
Is ESG investing a bubble or the future?
Investors are having a change of preference, with climate risk becoming more prevalent than ever. But is this driving the next investing fad or is it the way of the future? ...Read more
Shares
Study reveals why younger adults are likely to indulge in risky investment behaviour
The risky behaviour associated with ‘meme stocks’ should not surprise markets as younger adults continue to indulge in riskier investment behaviour. ...Read more
Shares
ETFs are more popular than ever
Exchange-traded funds are moving from novel to normal for Australian investors. ...Read more
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Shares
Rising rates set to kill ‘unicorn investments’
Shifting economic strategy post-COVID-19 will lead to rising interest rates, causing the death of “unicorn investments”, an industry expert predicts. ...Read more
Shares
The surprising poster child for ESG investing
Investors looking to have the most impact on the world should not simply follow ESG values, but instead focus on companies that will be needed in a “post-carbon world”. ...Read more
Shares
5 tips to turn down the noise and stay focused as an investor
A surge in financial information, opinions and a natural inclination to focus on the negatives is leading to poorer short-term outcomes for investors, which is impacting long-term results, an economis...Read more
Shares
Why investors should expect modest returns this financial year
Regardless of the investment type, the highs of the 2020-21 financial year are unlikely to be replicated over the next 12 months, an industry expert has warned investors. ...Read more
Shares
Are ETFs and REITs a way for young Australians to build their stake in the property market?
Fractional property isn’t the only low-cost route into Australia’s property market jockeying for attention from younger investors. ...Read more
Shares
Is ESG investing a bubble or the future?
Investors are having a change of preference, with climate risk becoming more prevalent than ever. But is this driving the next investing fad or is it the way of the future? ...Read more
Shares
Study reveals why younger adults are likely to indulge in risky investment behaviour
The risky behaviour associated with ‘meme stocks’ should not surprise markets as younger adults continue to indulge in riskier investment behaviour. ...Read more
Shares
ETFs are more popular than ever
Exchange-traded funds are moving from novel to normal for Australian investors. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
