David Lawrence, COO of APX (right) and George Wang, chairman and CEO at the opening of the new stock exchange. Photo: Louie Douvis
Source: The Australian Financial Review By: Shaun Drummond
Despite the delay, Wang says he has big plans for the bourse, which is based in Sydney.
“There will be a small number [of companies] initially,” he said. “We need to put the time in to make sure the systems are right. Once we are 100 per cent confident, then we will move very fast.”
Diet supplement maker Australia Samly Holdings Limited raised $4.6 million and parcel and packaging firm ZhongHuanYun Holdings Group $3.5 million before listing, but the exchange’s management said they expect up to another 10 companies to list this year.
Both companies listed above their issue price, but fell short of what they were looking to raise. Australia Samly wanted to raise up to $10 million and ZhongHuanYun $6.6 million.
Unlike the ASX, which can wait for companies to list, the APX will need to chase companies and investors. It expects to do this via Wang’s network of contacts and clients built up over decades though his AIMS Financial Group, which lends to Chinese investors,.
Wang said investors in China would still prefer to buy property because they don’t trust shares. So his pitch is that they can invest in Chinese companies under Australia’s robust governance standards via APX.
“In China there is no shortage of companies, no shortage of capital [but] there is shortage of transparency,” he said. Much like other smaller exchanges that have sprung up in Europe or the US, the APX will specialise in sectors under represented or over represented on the main exchange – in APX’s case this includes smaller agribusinesses, tech start-ups, and miners, who can get lost in the huge number of resource stocks on the ASX.
“The companies we start with, it is not because they are big or small, but because of their growth story – 30, 40, 50 per cent [growth] a year,” he said. “If the company is very big, it won’t grow much or it may be going down. Why would an investor want to invest in that.” Chief operating officer David Lawrence said the exchange will differentiate in several other areas.
If regulatory approval is granted, APX will allow trading in stocks in Chinese yuan as well as Australian dollars. He hopes this will attract Chinese retail investors by removing the currency risk for them. The huge number of potential investors in China could then quickly build up liquidity in the exchange.
As well there will be mechanisms to limit high frequency trading, such as by introducing short pauses when stock can’t be traded. Lawrence says they will also need to set up their own stock clearing facility rather than relying on the ASX as they do now. But unlike Chi-X, Lawrence stresses they are not competing directly with the ASX because they are not listing companies that also list on the ASX. The aim is to bring companies to Australia that have never listed here before. “We’re growing the pie not eating it,” he said.