This article appeared in the August 2009 Listed @ ASX newsletter.

Market performance for the 2008/2009 financial year

In the 2008/09 financial year Australian companies raised a record $88 billion in subsequent equity issues.

The benchmark S&P/ASX 200 index fell by 24% during FY09, to end at 3,955 on 30 June 2009. Broader equities produced a total negative return of 22.1% based on the All Ordinaries accumulation index. The performance of the benchmark was on par with that of major international markets. Total market capitalisation of ASX listed companies fell by 19% to $1.2 trillion, compared to $1.5 trillion in FY08. The average daily trade count rose to new highs during FY09, showing an increase of 17% to 420,000. The value of equities trading fell to $1.2 trillion, in-line with the decline in market capitalisation. The trend of a rising trade count but a falling average trade size continued during the period, which largely reflects the increase in Algorithmic trading activity in the market.

Index FY09 Price
Performance
S&P/ASX 200 -24.2%
S&P 500 -28.2%
Nikkei 225 -26.1%
FTSE 100 -24.5%

Source: IRESS

Equity capital markets

In the 2008/09 financial year ASX listed companies raised a record $88 billion in subsequent equity issues. So far in CY09 Australia is the third most active capital market in the world by value of equity issuance, highlighting the importance of an efficient capital raising framework. 

In relative terms secondary capital raisings represented 7.1% of average market capitalisation. This relative rate of equity issuance is the second highest in the world and more than twice the ASX level of FY08. Primary market issuance, as a percentage of market capitalisation is at the highest level in over a decade. Similar levels of activity were last seen following the share market corrections and recession in the late 80s and early 90s.

Approximately, half of all listed companies raised some secondary capital in FY09. In terms of value, over 90% of the total was raised by S&P/ASX200 constituents, two-thirds of which accessed the market for new capital. Volatility drove issuers and their underwriters to implement offer structures that minimised market risk and provided maximum funding certainty. As a consequence there was a shift towards placements and accelerated non-renounceable entitlement offers.

Some 560 companies issued shares in a private placement. Approximately, one quarter of those also offered retail shareholders a chance to subscribe for securities in a Share Purchase Plan (SPP). Since June 2009 companies have additional flexibility to offer up to $15,000 of securities to shareholders in an SPP under changes announced by ASIC. Following the changes ANZ successfully executed the largest ever SPP by raising $2.2 billion from existing retail shareholders. In other capital management initiatives, share buy-backs were cut dramatically and totalled only $2 billion.

ASX Capital Raising FY09 ($B) FY08 ($B)
IPOs 1.9 11.0
Rights Issues 28.5 12.4
Placements and SPPs 42.0 22.2
DRPs 15.0 11.6
Calls 0.1 0.2
Options 0.3 0.4
Prospectus 0.4 0.3
Staff share plans 1.8 3.4
Total Raisings 90.0 61.6
Other Capital Changes    
Share Repurchases -2.0 -5.7

Copyright 2009 ASX Limited ABN 98 008 624 691. All rights reserved 2009.

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