Comment

2003 Issues

July/August 2008

As the months go by the severity of the global financial turmoil escalates thus reinforcing the fear now stalking markets. As is usually the case in the investment world fear and greed are virtually always overdone. As I write this short note the financial news and comment is almost totally gloomy, to such an extent that one would assume the end of the world – at least the capitalist world is at hand. At times like these many investors sell whatever they possess in order to escape the perceived dangers inherent in all equities. Such behaviour is of course quite rational in that it appears logical to sell today something that will be worth much less tomorrow and even less the day after.

However, the dramatic collapse in the share prices of major stocks in the banking, real estate and building sectors are now putting many leading groups on multiples that are likely to look extremely cheap in a few years’ time, assuming of course that they are still in business then.

All this bearishness has inevitably led to a reduction in the flow of new issues, although so far this year the IPO sector has maintained a remarkably steady momentum, given the generally bearish environment.  

Most of the action relating to forthcoming placings and flotations on the LSE markets involves companies operating or investing in the commodities sectors, mainly mining and oil exploration stocks.

Somewhat surprisingly there are more smaller companies queuing up to join the PLUS market facility than we’ve seen for a long time, although it is apparent that several of these have delayed their listing dates.

John Mulligan

July 2008