"No longer can America take for granted its global superiority as a market for capital"
— the Economist
In a recent November 25th article "Down on the Street", the Economist lays out a very compelling analysis and overview of the mess our domestic financial markets are in. As discussed often in this blog, if we don’t address many of the issues plaguing our financial system as it relates to emerging businesses, we will lose our pole position in the global financial world. In fact, for the first time, Europe’s share of the worldwide corporate-debt issuance market surpassed the US. Furthermore, the AIM & LSE have passed the US in terms of % share of worldwide IPO proceeds with Hong Kong nearly dead-even with us. As recently as 2004, the US share was 5-10x that of Europe and Asia.
Some factors are to be expected such as capital and companies electing to stay local versus meeting in the US. However, many factors are self-inflicted wounds ranging from SOX to shareholder litigation abuse to balkanized regulatory oversight to inadequate shareholder rights. My favorite example is where China Life was hit by a shareholder suit within days of its US IPO. While things are heading in the right direction with SOX review, tort reform and the prosecution of the leaches at Milberg, Weiss.
The article is a good read for those interested in this topic and have any desire to ever go public on our soil…