New listing on NASDAQ may signal market thaw

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This article was published 02/04/2009 (5501 days ago), so information in it may no longer be current.

On Thursday the NASDAQ stock exchange celebrated its first new listing for several months — a $16-million initial public offering of a Chinese gaming company, called Changyou.com.

Jordan Saxe, NASDAQ’s managing director for Canada, said although the new listing is not by itself cause for celebration, it is a hopeful sign.

“The market was really frozen and we call this a thawing,” said Saxe, who was in Winnipeg to participate as a judge in this week’s 5th annual Stuart Clark Venture Challenge, the largest graduate student business plan competition in Canada, which is organized by the University of Manitoba’s Asper School of Business.

“There are 29 companies in the pipeline with active filings (preceding initial public offerings),” said Saxe. “Depending on how this one goes and how it trades it could open up the potential for some of those that have been waiting in the wings.”

Exchanges in Canada have probably been even more quiet than NASDAQ.

In fact, the Toronto Stock Exchange just reported its ninth consecutive month without a new listing.

“It has been hard to find many signs of life in the IPO market in the past two years, so optimism about the second quarter, and even beyond, is in short supply,” said Ross Sinclair, head of PricewaterhouseCooper’s IPO and income trust services in Toronto. “But that doesn’t mean investors have stopped looking for opportunities in other new listings.”

NASDAQ’s revenues grew by 50 per cent in 2008 to $3.2 billion US. Even though stock prices have tumbled there has still been plenty of trading and the exchange makes some of its money on the volume of transactions.

But Saxe said that is only a short-term impact and the exchange needs the markets to become healthier.

He believes that green technology, alternative energy and biotech companies are going to be the growth sector of the near future, much as Microsoft and Dell Computers provided so much growth for NASDAQ back in the ’90s.

Saxe said NASDAQ is trying to rein in some of the opaque, unregulated derivative trading activity that has caused so many of the problems in the international financial industry.

“Today interest rate and credit swaps are traded with no external validation or central clearing mechanism.”

martin.cash@freepress.mb.ca

— With files from The Canadian Press