Record financial year for capital markets
Capital markets have gone from strength to strength in the 2005-06 financial year, raising a record amount of $42.5 billion in funds, which represents an increase of 22 per cent from the previous year.
The outstanding performance of the sector has been revealed in the “2005-06 Capital Markets Survey” produced by accounting firm KPMG.
The report identified hybrid securities as a major contributor to the result, as the asset class contributed $13.2 billion toward the record total.
KPMG executive director corporate finance, Antony Cohen, attributes the popularity of hybrids to the tax benefits their issuers can enjoy and the continuing demand by investors for solid yields.
IPO (initial public offer) activity was also significant raising $11.9 billion in funds from 164 transactions, with the average value of each float jumping to $72.5 million from $53 million over the same period last year.
“This high level of IPO activity was driven by the buoyancy of the Australian share market and the weight of money from superannuation in combination with the resources boom, activity in the private equity sector, strong growth in company earnings and the performance of the Australian economy, now in its fifteenth consecutive year of expansion,” Cohen explained.
As far as industry sectors were concerned, the main drivers this year were utilities, real estate and resources. However KPMG expects the uranium, transport, and media industries to be more dominant in the coming 12 months.
“As oil prices skyrocket and the push for environmentally friendly energy intensifies, alternative energy sources such as uranium will attract more focus and investment,” Cohen said.
“As Australia possesses around a third of the world’s uranium reserves, we expect to see a good deal of investment in this sector in the coming years,” he added.
Recommended for you
There could be changes ahead for how ASIC requires licensees to handle conflicts of interest as the corporate regulator announces it will be meeting key stakeholders next year to update guidance.
As investors increasingly seek to embed ESG considerations in their portfolios, a specialist adviser has offered tips for financial planners who may feel overwhelmed in tackling these complex topics with clients.
Global investment consultancy bfinance is expanding into offering services for wealth managers as they seek advanced investment strategies for their clients.
The majority of advisers are failing to proactively understand their clients’ needs and satisfaction, with just one in four practices formally seeking feedback in the last two years, according to Business Health.
