This article appeared in the March 2008 Listed@ASX email newsletter. To subscribe to this newsletter please register with the MyASX section or visit the About MyASX page for past editions and more details.

Another year of double-digit gains overshadowed by global volatility

After returning 12% plus dividends in 2007, the Australian market had the worst start to a year in over a century. Concerns about the credit crisis, leveraged selling and the chance of a US recession created a perfect storm for equities in January. After experiencing 11 consecutive down days the ASX saw its steepest one-day fall in over a decade on the 22nd of January.

The benchmark index closed down almost 400 points lower at 5,186. This was some 24% below the 6,851 intra-day high of 1st of November 2007.

Despite outbreaks of volatility throughout 2007, the year produced the fifth-consecutive double-digit annual return. The performance of the index was above what most analysts had expected at the beginning of 2007. The graph below illustrates nearly five years of out-performance by the S&P/ASX 200. The index run since 2003 has seen it climb 10 per cent in 2003, 23 per cent in 2004, 18 per cent in 2005, 19 per cent in 2006 and 12 per cent in 2007.

Five years of out-performance by the S&P/ASX 200

Five years of out-performance by the S&P/ASX 200

In 2007 the Australian market continued to show solid support for new entrants. December alone saw over 58 new listings (including debt listings) enter the market. This pushed the official number of ASX listings for the year to an all time high of 313 (including debt listings and additional entities listed to stapled groups). A total of $19.9 billion was raised by float in 2007 with an average and median capital raising statistics of $76 million and $11 million respectively.

A record number of resource-focussed small to medium listings contributed to the tally of 231 SME floats (defined as companies with a market capitalisation of less than $100 million). Out of the 150 floats in the Energy and Metals & Mining sectors, 145 were capitalised under $100 million.

At the other end of the spectrum were two billion-dollar-plus listings:

  • Platinum Asset Management and 
  • Boart Longyear.

These were the largest capped companies to join the official list at approximately $2.8 billion each.

Established companies also found the conditions supportive of secondary capital raisings. In 2007 ASX companies tapped the market for a record $62.5 billion in follow-on raisings.

ASX listings 2007 by sector

ASX listings 2007 by sector

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