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Capital Formation Roundtable

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

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  1. Capital Formation Roundtable Factors influencing Capital Formation in Emerging Markets Hannes A. Takacs Orlando, 27th March 2012 www.capmex.com

  2. 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

  3. 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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