Bangkok--Jun 23--Grant Thornton
SESDAQ, TSX-V, NASDAQ and AIM have provided investors with the highest returns of any global new market for the past three year period. Such performance signals a polarisation among global new markets where a selected few have established themselves as growing successful entities with either a strong or developing international presence. Most others, however, remain largely stagnant, operating within a domestic context of illiquidity and attracting too few quality companies, according to Grant Thornton International's Global New Markets Guide 2005.
Since the mid to late 1990s, when the majority of the world's new markets (broadly defined as those appealing to younger, high growth companies) were created, competition has been rife to create healthy environments to nurture fledgling and high growth companies and to then expand these markets' appeal to an international audience of companies.
Ian Pascoe, Managing Partner of Grant Thornton in Thailand said, "Globally, a mere handful of markets can be said to have truly succeeded in attracting new companies and in growing investor appeal beyond national borders. SESDAQ, TSX-V, NASDAQ and AIM have, albeit for very different reasons, undoubtedly delivered value for money.”
The likes of GEM and the Mothers Market have also had a certain degree of success, particularly in terms of achieving critical mass, but have been less impressive in terms of delivering investor returns. Beyond this leading pack, with the exception of what constitute short-lived success stories, the equities landscape has been barren, with many countries maintaining a new market more for cosmetic value than business sense.
The Global New Markets Guide 2005 evaluates global new markets in terms of their 2004 performance based on a basic analytical criteria of looking at only those markets that have been in operation for more than three years, have at least 40 companies listed and a $3bn market capitalisaton. Just 10 markets* meet these criteria.
"Whilst there are 36 new markets worldwide, the vast majority offer little or no appeal to domestic businesses, let alone international investors. Most markets are unable to break beyond the small cluster of domestic companies they list with others falling by the wayside such as the Czech and Dutch new markets that have now closed their doors", said Mr. Pascoe.
Meanwhile, some of the world's leading new markets are powering ahead. NASDAQ, which dwarfs all of the other new markets combined, remains the benchmark for growth companies around the world; however, other markets such as AIM, TSX-V and SESDAQ are holding their own. On the back of some impressive domestic performances the world's leading new markets are now pitching themselves at an international level in a bid to win the race to attract growing international companies with those from the growing Indian and Chinese economies often the most sought after.
In Thailand, the Stock Exchange’s awareness of the need for SME’s to gain access to capital markets resulted in the introduction of the Market for Alternative Investment (MAI). Since being launched in 2001, the MAI has seen a substantial increase in the number of companies listed with an 84.6% increase in 2004.
The market capitalisation of the MAI grew 260% in 2003 before a slight drop in 2004, however, the first 4 months of 2005 have seen market capitalisation rebound.
“The ability of SME’s to gain access to liquidity through equity rather than debt is a crucial factor in creating long-term, sustainable, growth. While much more can be done to foster an environment where SME’s can truly prosper, the MAI’s greater flexibility in listing requirements allows SME’s access to capital that would in most situations be unavailable,” Mr. Pascoe said.
From a retail investor’s viewpoint the MAI has at times proven a rocky ride. Huge gains were made in 2003 when the market peaked at 400 points, however, from December 2003 to October 2004 the market entered negative territory with a decline of 54%. The first 6 months of 2005 have seen the MAI remain relatively flat.
Although the MAI is still along way from reaching the size of the regional benchmark, SESDEQ, with an average total market capitalisation of US$3.5 billion, the MAI will continue to play an important role in development of SME’s and the Thai economy in general.
For an individual perspective on this story from our spokespeople or for further information please contact:
Ms. Nontakorn Kijthanapaisan, Marketing Manager, Grant Thornton — 02-654 3330 / [email protected]
NOTES TO EDITORS:
* AIM, GEM, KOSDAQ, Mothers Market, NASDAQ, Nouveau March?, Nuovo Mercato, Ofex, SESDAQ, TSX-V
The Global New Markets Guide 2005 expands on the success of previous markets guides and this year compares the performance of the 36 new markets currently competing to list growth company stocks. This Guide also includes a directory of all main markets, looking at how successful they have been over the last three years, analysing their index performance, variation, market capitalisation and the overall liquidity of the market.
Grant Thornton is a member firm of Grant Thornton International, was established in Thailand in 1991. The firm is well recognised throughout the region as one of the leading professional service firms offering a complete range of accounting, assurance and business advisory services to international companies, entrepreneurs and managers. The firm is headquartered in Bangkok with a regional office in the Eastern Seaboard Industrial Estate, Rayong.
The firm has over than 100 professional members including partners, directors and staff. With a corporate culture that combines innovation, integrity and a commitment to client service, our professional service teams seek to provide the solutions businesses require
Click for photo release at www.thaipr.net End.