Friday, October 23, 2009

United States Being Eclipsed in Capital Raising.

The United States of America has become the greatest country in history in part because of its freedom.  In the late 18th century, citizens freely gathered under a buttonwood tree at the foot of Wall Street to talk and trade securities and money. In 1792, they formalized their association with the "Buttonwood Agreement", the origin of the New York Stock Exchange.  That little beginning created the first capital market of the U. S. and the foundations under which capital markets around the world were created.  Those citizens, and later institutions, with excess money traded it for ownership interests in organizations and companies which wanted it.  These investors thought they could garner better returns through investing.

The New York Stock Exchange was the predominant securities exchange in the world for decades, trading more than any other.  And American companies -- and the country itself -- were the primary benefactors of the NYSE and other, smaller institutions of capital.  But finance has evolved and America is being eclipsed by competition.  This year so far, the largest initial public offerings (IPOs) of securities to raise capital belong to foreign companies.  Banco Santander Brasil as of the first of October is the largest (raising $8 billion) and China State Construction Engineering Corp. is second at nearly $7-1/2 billion. 

And as of October 9 they are: Banco Santander Brasil, Brazil $8,067.6; China State Construction Engineering, China $7,342.7; Visanet  Brazil; China Metallurgical Constr. China; Verisk Analytics Inc, U.S.; Everbright Securities Co, China; SINOPHARM, China; Glorious Property Holdings Ltd, Hong Kong; China Zhongwang Holdings Ltd; China; National Hydro Electric Power, India .

Only one of the largest IPO was on the NYSE, one jointly with NYSE andthe Sao Paolo Stock Exchange and one through NASDAQ.  The rest were from other country's exchanges with the most on the Hong Kong Exchange.  Two-thirds of the IPOs in the United States were from Chinese companies.  For more information about China, please see my post, "China Eats United States for Lunch".

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