Capital formation roundtable
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Capital Formation Roundtable. Factors influencing C apital F ormation in Emerging Markets Hannes A. Takacs Orlando , 27 th March 2012. Current Status: Vicious Circle. Low market capitalization as well as trade velocity Domestic investors seek global liquidity

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Capital formation roundtable

Capital Formation Roundtable

Factors influencing Capital Formation

in Emerging Markets

Hannes A. Takacs

Orlando, 27th March 2012

www.capmex.com


Current status vicious circle

Current Status: Vicious Circle

  • Low market capitalization as well as trade velocity

  • Domestic investors seek global liquidity

  • Limited access of international investors

  • Going public of domestic companies on international exchanges

  • Capital markets infrastructure still in development

Marginalized capital market – a vicious circle


Potential reasons for underdevelopment

Potential Reasons for Underdevelopment

  • Ownership structure of listed companies

  • Few majority owners

  • Small free float

  • Specifics of companies

  • Attractive large non-listed companies are state-owned

  • Mainly small/medium sized

  • Not listed / no intention to list

  • Rely on bank financing

  • Prefer to list abroad

  • Lack of attractive stocks

  • Few top performers

  • Corporate Governance

  • Partly weak fundamentals

  • Low shareholder value

  • orientation of companies

  • Lack of growth segment

Low quality

of supply

Low quantity

of supply

  • Venture capital market / private equity

  • Underdeveloped

Low

liquidity

Under per-

formance

Little

investor interest

  • Pension/Insurance system

  • Lack of private pension

  • schemes

  • Missing capital market orientation

Low demand of

investors

Low demand of

retail investors

  • Domestic Institutional Investors

  • Pension Funds dominate

  • Insufficient activity of other local institutional investors

  • International Institutional Investors

  • Lack of demand based on low weighting

  • of home country´s equity market in

  • international portfolios

  • Attractive home market stocks listed and

  • traded abroad

  • Private Stock Ownership

  • Low level of private stock ownership

  • Lack of awareness/education

  • Lack of strategic allocation during IPO

  • Invest outside of home country


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