December 13, 2010
The Committee on Capital Markets Regulation, an independent research organization directed by Harvard Law School Professor Hal Scott, reported on Dec. 9, 2010 that, during the first 3 quarters of 2010, the competitiveness of U.S. public equity markets in global markets showed slight improvement over 2009. However, performance is still not back to pre-crisis levels.
According to Scott: “Results from the third quarter of 2010 demonstrate improvement in some measures of U.S. competitiveness compared to previous quarters this year, but continued poor performance of important indicators, such as our share of global IPO activity, suggest that the overall deterioration in competitiveness identified in prior updates has not been checked.”
Some of the measures that improved in 2009 have deteriorated during the first three quarters of 2010 (previously reported measures concerning the listing and delisting of securities of foreign companies in the U.S. will be forthcoming on the CCMR website):
- By value, the U.S. captured a disappointing 4.9% of global IPO activity in the first three quarters of 2010. This is lower than the 16.9% share for all of 2009 and is far below the historical average of 28.7% for 1996–2006.
- Among global IPOs captured by the U.S., an overwhelming 94.7% of activity in the first three quarters of 2010 occurred in the private Rule 144A market rather than the public market. This is significantly worse than the rate of 70.2% in 2009, 95.5% in 2008, and 87.9% in 2007.
- During the first three quarters of 2010, 3.4% of IPOs by U.S. issuers were only listed abroad, compared to 3.0% for all of 2009. This percentage was just 0.3% for the period 1996–2006.
The following measure have continued to deteriorate:
- The U.S. share of global market capitalization by value declined to 31.4% at the end of the third quarter of 2010. This is lower than recent year-end figure of 32.4% in 2009 and is significantly lower than the historical average of 43.3% for 1990–2006.
- The U.S. share of global equity trading, measured by value, was 50.5% at the end of the third quarter of 2010, down from 58.1% at year-end 2009. However, this is on par with the historical average of 50.6% for 1990-2006.
As of 2010 Q3, the following measures showed improvement over 2009 levels:
- The equity raised via Rule 144A ADRs as a percentage of total equity raised by foreign issuers in the U.S. public market was just 0.6% during the first three quarters of 2010, compared to 4.1% for all of 2009 and 10.2% for the period 2000–2006. This indicates that foreign companies are increasingly using our public rather than private markets when they do raise capital here.
- The U.S. captured 7 of the top 20 global IPOs in the first three quarters of 2010. In all of 2009, the U.S. captured 2 of the top 20, and 0 in both 2008 and 2007. Historically, the U.S. has captured on average 5 of the top 20 global IPOs annually for 1996-2006.
- The U.S. share of total global M&A advisory and equity/debt underwriting revenue grew to 42% during the first three quarters of 2010. Historically, this figure was 37% for 2009 and averaged 49% for the period 1996–2006.
- The U.S. had a 25.3% share of the equity globally raised in public markets at the end of the period, compared to 24.6% at the end of 2009. This measure averaged 32.2% for the period 1996–2006.
The Committee on Capital Markets Regulation is an independent and nonpartisan 501(c)(3) research organization dedicated to improving the regulation of U.S. capital markets. Scott, in addition to serving as the Committee’s director, is director of the Program on International Financial Systems at Harvard Law School.
For more information on the Committee's research regarding the regulation of U.S. capital markets, visit their website at http://www.capmktsreg.org/.