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Speaker 1: Welcome to Ask Fear and Greed, where we take your

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Speaker 1: questions and do our very very best to answer them.

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Speaker 1: I'm Michael Thompson, and good afternoon, Sean Almer.

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Speaker 2: Good afternoon, Michael, Sean.

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Speaker 1: Today's question comes from Falgon. I sincerely hope Falgan that

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Speaker 1: I'm pronouncing your name correctly. He shared it via the website.

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Speaker 1: He went to Fear and Greed dot com dot au

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Speaker 1: and sent us. In this note, he says question for

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Speaker 1: Ask Fear and Greed, what is your take on the

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Speaker 1: shrinking asx two hundred? Following the number of exits from

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Speaker 1: big names in twenty twenty three twenty four new IPOs

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Speaker 1: are also not coming in at the same rate. Do

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Speaker 1: you see a potential fear from overseas investors or institutional

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Speaker 1: investors avoiding future investments due to concentration. What a question?

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Speaker 2: Yes answered tick done off for you, Thanks very much. Yes,

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Speaker 2: I think it's a big problem. Great question, I mean

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Speaker 2: it's a great comment. In the last six months, more

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Speaker 2: than eighty companies have delisted from the ASEX, and most

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Speaker 2: of them are pretty small yet probably haven't heard of them.

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Speaker 2: There are others that are better known. Book Topia, Altam

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Speaker 2: Aluminus Seat, and then we had all those building materials

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Speaker 2: companies like CSR, Borrel Adbray they all left as well.

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Speaker 2: Wait Long Year was another one. If you take a

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Speaker 2: longer time frame, not just twenty twenty three twenty four

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Speaker 2: that Falcon's talking about, but also a bit longer, you've

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Speaker 2: had like Sydney Airport, as Minerals, Billabong, Blackmore's, Coca Cola, Amatal,

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Speaker 2: Coster Group, Crown Resorts, SDR Health, indicare Leyton Simmit was

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Speaker 2: another big one. Link Group Oil Search was a big one.

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Speaker 2: Pandle version Australia of course, and then Westfield was broken up,

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Speaker 2: and so the international parts of Westfield effectively left the

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Speaker 2: local boss others like Newcrest Mining and after Pay. Actually

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Speaker 2: the international parts of Westfield probably fits into this one

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Speaker 2: as well. They've become part of larger corporations and the

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Speaker 2: buyers have maintained a secondary listing on the ASEX. So

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Speaker 2: in the case of after Paid, its block. In the

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Speaker 2: case of Newcrest Mining, it's Newmont, but investors aren't really

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Speaker 2: investing in this training company anymore that it's more of

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Speaker 2: the parent company. So we've had all those companies leave, right.

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Speaker 1: That's a big, big list, and they are some I

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Speaker 1: know that you mentioned there's a lot of smaller ones,

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Speaker 1: but those are some big companies and such well known names.

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Speaker 2: I mean Virgin Coca Cola, amatol Os Mineral, Sydney Airport

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Speaker 2: CSR like these are really big players. They were big players.

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Speaker 2: Problem is, of course, we haven't had anywhere near enough

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Speaker 2: floats to replace the old companies. The only real float

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Speaker 2: of note this year has been Goodsmany Gomez. So what's

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Speaker 2: it mean for institutional and local investors as well as

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Speaker 2: international investors? Some fund mandates, so the institutions are super funds.

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Speaker 2: For example, I put money into my super fund, I

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Speaker 2: might say I want to buy Aussie shares. The thing

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Speaker 2: is there's this amount of money chasing a limited number

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Speaker 2: of companies. Now that growing amount of money is in

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Speaker 2: large part thanks to mandated superannuation. More money chasing fewer stocks.

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Speaker 2: That puts upward pressure on prices. That's even if the

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Speaker 2: fundamentals of a company don't quite suggest that shares should

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Speaker 2: trade as high as they are. Maybe Commonwealth Bank is

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Speaker 2: an example of that. All the analysts think it's they

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Speaker 2: have a price at the moment, but it just keeps going.

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Speaker 2: International investors, well, they tend to want bigger companies, and unfortunately,

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Speaker 2: when you lose the Coca Cola amatals and the Sydney

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Speaker 2: Airports and the Odds minerals, we just don't have that

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Speaker 2: many big companies anymore. I think of the S and

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Speaker 2: P five hundred, the smallest stock on the S and

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Speaker 2: P five hundred is worth about eight point four billion

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Speaker 2: Aussie dollars. That's in terms of market cap. Now they

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Speaker 2: are only about sixty local companies that make that cut

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Speaker 2: off point. But if you're an international investor you think

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Speaker 2: let's go to Australia. You're kind of looking for a

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Speaker 2: big company. You want one with strategic benefits. So banks

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Speaker 2: of the obvious example, their resource stocks are another one.

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Speaker 2: Plus a handful of companies like CSL, which makes most

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Speaker 2: of its money in the US anyway, Goodwin Group wise,

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Speaker 2: Tech Global. But there's only like ten, maybe twenty serious

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Speaker 2: options for international investors. That's not exactly a surplus of choice.

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Speaker 2: To Faligon's point here.

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Speaker 1: No, how do we actually fix this in terms of

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Speaker 1: is there a fix in terms of getting more into

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Speaker 1: the IPO pipeline in order to improve the options that

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Speaker 1: are out there, particularly when you're talking about some of

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Speaker 1: those the size of the companies on Wall Street that

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Speaker 1: if we're looking at any of the big companies like Canvas,

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Speaker 1: for instance, there's no way in the world that's going

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Speaker 1: to list here in Australia. It's going to go straight

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Speaker 1: over to the US, isn't it just because of the

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Speaker 1: size of the market is so much.

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Speaker 2: Bigger totally, And the problem for anyone, any large company

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Speaker 2: listing here is that the depth the amount of money

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Speaker 2: in the market here is very small compared to Wall Street,

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Speaker 2: so they can go and raise money in Wall Street

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Speaker 2: much easier. So Candar is the great example. It's listing

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Speaker 2: on Wall Street, not locally, even though it is a

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Speaker 2: local company. Mind you, we have had the buy in

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Speaker 2: our pay latest sector in particular, has had a bunch

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Speaker 2: of US companies listing in Australia because it's people in

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Speaker 2: Australia or investors in Australia just understand the buy and

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Speaker 2: our pay later area better than US investors and therefore

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Speaker 2: they've been able to raise money easier here. But generally

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Speaker 2: it's the other way around. And if you're an international investor,

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Speaker 2: you're basically looking in banks, resource companies and a couple

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Speaker 2: of others. That's about it. The lack of stocks is

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Speaker 2: also a problem for local investors simply because it's just

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Speaker 2: going to be pushing up the prices. But whatever the

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Speaker 2: fundamental say, if there's this weight of money coming in,

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Speaker 2: it does push up the price, but then you can

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Speaker 2: be over paying for something. So when you get what

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Speaker 2: we've had since COVID is a lot more volatility in

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Speaker 2: the market. So the good news has sent the share

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Speaker 2: price up more, the bad news to send the share

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Speaker 2: price down more. I don't think that's going to be

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Speaker 2: unusual in coming years because of the lack of depth

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Speaker 2: of the companies in Australia. So I do think it's

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Speaker 2: going to become a more volatile market. And I mean,

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Speaker 2: I just I think it is a problem for local

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Speaker 2: institutional investors, local retail investors, and definitely for international investors.

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Speaker 1: Wow. So really not a lot of good news there

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Speaker 1: for Falcon is there.

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Speaker 2: Well, if you get onto the right stocks. If you've

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Speaker 2: got into come Bank twelve months ago, it's forty percent

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Speaker 2: over the last twelve months, west PA's up fifty percent, right,

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Speaker 2: So if you just only have your investment horizon as

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Speaker 2: the top fifteen stocks. Let's say, and you think BHP's

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Speaker 2: are one to go, well, you've been in all sorts.

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Speaker 2: If you thought weis tech Global was the way to go,

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Speaker 2: we've done incredibly well, or any of the big four banks.

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Speaker 2: So I do think that lack of adversity that does

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Speaker 2: come to buy to Eventually the banks will turn. They've

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Speaker 2: had a great run, but at some point things won't

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Speaker 2: go so well and then your market is going to underperform.

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Speaker 2: But yeah, I mean the US has the same problem

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Speaker 2: with the magnificence ofven tech stocks. It's dominated by those

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Speaker 2: big guys and so it has the same issue as

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Speaker 2: the Australian market does. In the UK, it's huge resources

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Speaker 2: index the foot see right, and so, and then financial

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Speaker 2: services as well in parts of Europe. So we're not

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Speaker 2: alone in this challenge.

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Speaker 1: Do you giggle every time you say foot see that's

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Speaker 1: playing it under the table?

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Speaker 2: I don't, but you do. I do.

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Speaker 1: Someone has to us laugh at that's right. Look. Of course,

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Speaker 1: we're not an investing podcast. I think I demonstrated that

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Speaker 1: with that last remark, and it is definitely advisable to

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Speaker 1: go and speak to a to a professional before making

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Speaker 1: investment decisions. But I do hope that you've answered your question.

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Speaker 1: I feel like, Sean, you've done an admirable job of

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Speaker 1: going through some of those challenges. Not a great deal

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Speaker 1: of good news there for Falgon, but hopefully plenty of

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Speaker 1: stuff to make you think.

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Speaker 2: Yeah, I hope so yeah.

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Speaker 1: Anyway, thanks Falgin for the question, and thank you Sean

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Speaker 1: for answering it.

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Speaker 2: Thank you, Michael.

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Speaker 1: Remember if you have something that you would like to know,

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Speaker 1: then please send through your question on LinkedIn, Instagram, Facebook

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Speaker 1: or do it Falgon didn't head to Fear and Greed

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Speaker 1: dot com. Dodator you and send it on through there

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Speaker 1: and we'll pop it on the list. Michael Thompson And

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Speaker 1: this is ask Fear and Greed