Australian Stock Market
Facts and Figures
It is sometimes beneficial to take a step back from the detail of technical trading, charting, spreadsheet analysis, macro-economic fundamentals and micro-economic influences to look at the Equity market as a whole.
The Stockmarket: In Australia the main exchange is the Australian Securities Exchange (ASX). There are two more authorised exchanges; the Newcastle and Bendigo exchanges. The ASX co-ordinates and regulates the exchange of securities of all companies that are listed on the exchange, however this dual role will cease in late 2009, with the regulation to be ceded off to a government authority. .
When a company decides to raise capital by issuing equity (shares) to the general public they will apply to the Australian Securities Exchange for permission to list their shares on the exchange. The ASX will ensure that the company satisfies minimum criteria to try and ensure investor's money is protected from fraud. The criteria include; Minimum amount of capital, asset levels, minimum number of shareholders, details of Directors and the preparation of a prospectus.
Once the ASX agrees to list the company the security is given an ASX code and it engages in an Initial Public offering (IPO) on the primary market. The primary market is where the company offers its shares directly to the public and the capital raised goes straight to the company, investors are able to decide if they would like to invest in the company by viewing the company prospectus which contains details on the issue price, financial forecasts, lists of directors, the amount of capital being raised and the number of shares being offered.
Once the securities are listed they move to the secondary market where they can be traded among investors. In this market the original issuing company derives no direct benefit from the securities being traded, you may wonder why the issuing company would care about the performance of their share price once they have raised the initial capital, there are a few reasons but the main drivers are that a healthy share price allows the company to have confidence in raising further capital by issuing additional securities via the primary market, knowing that investors will want to purchase the stock. Additionally, a company is able to raise additional finance from other sources such as banks and other institutions at a cheaper rate if the price of the securities has risen, demonstrating successful management and good profits.
ASX 2009 FACTS
- ASX Market capitalisation (September 2009) - $1,346,123 billion, up from $724,175 billion in April 2002.
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- Total number of Australians investing in shares (million)
- 1997 - 4.70
- 2000 - 7.40
- 2004 - 8.03
- 2008 - 8.40
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- Number of Australian Initial Public Offerings (IPO) in 2008 - 34
- Amount raised - US$42.875 billion
- Number of equity trades on the ASX over Sept 2009 - 12,321,956
- Number of CFD trades on the ASX over Sept 2009 - 15,413,361
- Number of Option contracts traded on the ASX over Sept 2009 - 1,845,684
