Nasdaq, the United States’s largest electronic stock market, is discussing listings with “several” South African companies and a listing is expected this year, Nasdaq managing director Paulina McGroarty told a briefing in Johannesburg on Monday.
McGroarty is one of three Nasdaq executives who will be attending the mining indaba in Cape Town this week. This is Nasdaq’s second road show in the country and follows a visit in August.
Five South African companies, Naspers, Hiveld Steel, DRDGold, Randgold Resources and Randgold & Exploration, already have Nasdaq listings.
Nasdaq senior managing director for international marketing, Peter Yandle, told the briefing that 10% of all companies listed on the Nasdaq were incorporated outside the US.
He said that Nasdaq was the world’s largest marketplace in terms of the number of companies listed and value traded. Contrary to popular belief that it is a tech-heavy index, only 30% of Nasdaq companies are in the IT sector.
According to Yandle, the US is a very attractive place for companies wishing to be visible and to raise capital. A US listing can help increase investor confidence in terms of higher disclosure standards in the US markets. It can also help create brand awareness.
Since 1992, 83% of the IPOs in the US have been on the Nasdaq.
Charlotte Crosswell, the head of international marketing, said that South African companies listed on Nasdaq traded better than those listed on the New York Stock Exchange (NYSE) due to the Nasdaq’s electronic market structure, which was superior to the NYSE’s floor-based market.
Looking at the South African mining companies listed on Nasdaq, compared to those listed on NYSE — AngloGold Ashanti, Harmony and Gold Fields — she noted that average share volume traded as a percentage of the US float was almost 8% higher at 0,7% compared to the NYSE’s 0,18%. On the Nasdaq there were at least 20 competing market makers on average in each share, making for greater liquidity. Average daily dollar volume on the Nasdaq as a percentage of US float was 5%, compared to the NYSE’s 2,74%
Listing on the Nasdaq was also cheaper, with the cost of the original listing coming in at a maximum of $150Â 000 compared to the NYSE’s $250Â 000.
Yandle confirmed that there would be an appetite among US investors for Nasdaq listed South African companies. In addition to the likes of emerging market funds, there was also likely to be interest in well-run companies that had potential to surprise in terms of earnings growth and upward share price movement. – I-Net Bridge