Public capital markets are essential for raising capital, ensuring liquidity, and providing price transparency for companies and investors. They play a crucial role in transforming ideas from startups into engines of economic growth.
However, increasing competition from private markets and innovative global exchanges necessitates adaptation in Australian public markets to maintain their role in wealth generation.
The Current State of Public Listings
A key indicator of effective equity capital markets is the growth in public company listings in relation to company and capital formation. Data from the Australian Securities and Investments Commission (ASIC) shows a 4.5% annual increase in new company registrations, reflecting a strong entrepreneurial spirit.
Simultaneously, Australian Prudential Regulation Authority(APRA) data indicates that superannuation savings, a significant pool of potential investment capital, are growing annually by approximately 8%.
Despite these positive trends, the number of companies listing on the Australian Securities Exchange (ASX) is declining.
Over the five years leading to 2023, the number of public companies on the ASX decreased by an average of 1.7% annually.
This suggests that new, high-quality businesses are not viewing the local public markets as their optimal capital source, indicating underutilisation of the economy.
Australia's Economic Landscape
Australia’s economy has increasingly concentrated on the resources, agriculture, and energy sectors, while manufacturing has significantly declined. Reserve Bank data from 2023 reveals that about 70% of national income and wealth comes from resource and agricultural exports, whereas manufactured goods contribute only 20%.
Manufacturing output has halved over the past two decades, whereas mining has surged by 330%.
Opportunities for Market
Two major shifts present opportunities for better utilisation of Australia’s public markets.
First, there is a strong governmental push towards transitioning from fossil fuels to green energy. Second, there is a growing focus on strengthening Australia’s defence and national security, driven by global challenges.
These shifts represent real goals and projects, with the AUKUS agreement committing Australia to $368 billion in expenditure up to the mid-2050s.
Various other programs aim to enhance energy transition technology, artificial intelligence, cyber capabilities, hypersonics, quantum computing, and advanced manufacturing.
The government's intention to involve superannuation funds and private capital in these initiatives signals an opportunity for equity capital markets to play a pivotal role in raising the necessary capital, presenting a unique chance to invigorate Australia’s capital markets.
éthica capital, Green Bond Corporation SARL (GBC) and Carbon Capital Corporation (CCC)
éthica capital, Green Bond Corporation SARL (GBC) and Carbon Capital Corporation (CCC) form part of The Green Bond Corporation Group (GBCGroup). Combining deep expertise and global thought leadership in sustainable finance, infrastructure development and carbon-based financing that aligns with your environmental and humanitarian goals, empowering your business to achieve greater success and create a meaningful positive impact.
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