Markets: Capital Raisings, Listings Fall, Fed Govt. Orders Review Of Annual Meetings

The market turmoil in November, ignoring the stellar final three days of the month, has had an impact on not only the performance of the market, but also on IPOs and other fund raising.

But there's also another reason for the fall in listings and capital raisings from a year ago that is not readily apparent. But more about that shortly.

The ASX said in its monthly activity report yesterday that capital raised by companies listing on the ASX dropped 61% last month.

Just eight companies raised total capital of $3.6 billion, down from the $9.1 billion raised by 10 companies in November 2010. IPOs totalled $936 million, with $2.6 billion of secondary issues (BlueScope was a big one at $400 million). $1.6 billion of other capital was raised in November including what the ASX said was "scrip for scrip issues".

But the 2010 figure was skewed by the huge $6.2 billion listing of QR National, which remains the largest funding raising on the market for the past year.

The fall marks a sharp turnaround after listings jumped 36% to $3.9 billion in October, which was a stronger month for the market with a sharp rise.

The value of ASX-listed stocks fell 4% last month from October from the previous month, with the average value of shares traded in a day down at $4.5 billion from $4.7 billion in October, despite a rise in the daily trading volume, the ASX said.

"Global factors, especially the European debt crisis, continue to drive down equity market valuations, including Australia," ASX said.

"The same global factors are also impacting on derivative volumes, particularly single stock options and interest rate futures."

The ASX said average monthly new listings for the financial year so far "stand at 9 (compared to 13 listings per month on average for the 2010 financial year)".

"New listings for the month were Aziana Limited (AZK), Bligh Resources Limited (BGH), Chorus Limited (CNU), County Coal Limited (CCJ), Discovery Resources Limited (DIS), Minrex Resources NL (MRR), RXP Services Limited (RXP) and Series 2011-3 WST Trust (WSN).

"De-listings for the month were ConnectEast Holding Trust (CEU), ConnectEast Investment Trust (CEU), Conquest Mining Limited (CQT), Eastern Star Gas Limited (ESG), Infochoice Limited (ICH), Macquarie Fortress Australia Notes Trust (MFN), Telezon Limited (TLZ) and WOT CMBS Pty Limited Series 1 (WOC)," the ASX said.

Meanwhile the federal government has revealed a desire for change in the idea of annual general meetings (AGMs).

In a statement yesterday, Parliamentary Secretary to the Treasurer, David Bradbury said the government had asked the Corporations and Markets Advisory Committee (CAMAC) to look at how the AGM may operate into the future and how it might better deliver opportunities for shareholder engagement.

"The AGM plays a vital role in providing information to shareholders and holding directors accountable," Mr Bradbury said in the statement yesterday.

"The Gillard Government believes in the importance of shareholder engagement. That is why we reformed Australia's executive remuneration laws and introduced the two-strikes test, so that boards must justify the pay of executives and so that shareholders are given the power to have a say.

"The AGM is an essential part of the shareholder engagement framework and this inquiry will help to inform future policy directions about how the regulations governing the operation of the AGM might be refined to encourage improved outcomes for companies and shareholders.

"I have asked CAMAC to examine the future of the AGM, with particular regard to the impact of technological innovations and globalisation on the methods of information distribution and the way in which shareholders interact with companies."

The terms of reference for the inquiry are:

The future of the AGM in Australia, including how documents and meeting forms should change to meet the needs of shareholders in the future
The risks and opportunities presented by advancements in technology, in the context of maintaining the ongoing relevance and efficacy of the AGM; and
The challenges posed to the structure of the AGM by globalisation, including potential increases in international share-ownership and dual-listing.

"While the AGM will continue to be a forum for shareholders to have their say, the way in which this occurs will continue to evolve. I look forward to this inquiry looking closely at the emerging opportunities for better transparency, accountability and shareholder engagement through the AGM," Mr Bradbury said.

Comment: This is an issue well worth keeping an eye on because some influential company chairmen and lobbyists want to limit shareholder involvement (and 'no' votes on remuneration reports) in annual meetings and return them to ciphers.

Some of these are from Melbourne and they fear shareholders asking questions about their mostly underperforming companies and their board and director payments.