Global businesses can now raise funds on the biggest and most liquid stock exchange in the world, the New York Stock Exchange, through direct listings, without going through investment banks, known for often charging hefty fees.
In a statement released on its website yesterday, the U.S Securities and Exchange Commission approved the NYSE’s “direct” listing plan. Such a move is seen in many quarters as a major change in overhauling the U.S. initial public offering market, by allowing aspiring public firms to sell shares directly to intended investors.
Investment banks have for decades organized Initial Public Offers, marketed them to institutions, and supported the company’s stock via their trading desks.
The report further said:
- U.S SEC recognizes that a primary direct listing may not feature all of the services we have come to associate with traditional underwriting. This is certainly a change.
- However, we must keep in mind that these are still registered offerings, the anti-manipulation provisions of the federal securities laws will still apply, and there will be a variety of participants involved in the initial offering who will all be performing important gatekeeper functions, including an issuer’s financial adviser, which in the direct listings to date have been the same investment banking firms that are also involved in traditional initial public offerings (“IPOs”).
- In addition, as a company that chooses to utilize a primary direct listing would sell its shares directly on the exchange in an auction, investors would be able to participate in a single on-exchange transaction that would match buyers and sellers in a transparent manner.
- While this represents a different price discovery method compared to traditional IPOs, the proposed auction mechanism is designed to provide fair and efficient pricing for participating investors. Utilizing such an auction may have the additional benefit of increasing opportunities for investors.
The recent update in such rules followed by months of lobbying will help curb what investment experts call outrageous underwriter fees, a major barrier to a business looking to go public. Investor groups, however, warned that it could curb their protections, as investment banks perform due diligence on businesses going public.
Tesla gains as the Dow plunges; investors shun inflation concerns
The S&P 500 increased by (+0.33%) as the Dow made a loss of (-0.20%).
Investors bet that a higher-than-anticipated increase in inflation would not be enough to slow economic stimulus policies, as equities hit new highs and bond yields dropped. Consumer prices grew faster than expected last month, but investors speculated that the pace was not quick enough to justify any Federal Reserve policy reform. Bank stocks were hurt by the decline in yields. Nasdaq took a hit of (-1.05%) during the session.
The S&P 500 increased by (+0.33%) also. The Dow made a loss of (-0.20%).
Tesla delivered 184,800 new cars in the three months ending in March, up more than 100% from the same span last year and well ahead of Wall Street expectations of about 177,000 vehicles. Hence, Tesla shares soared on Monday after Canaccord Genuity upgraded the clean-tech carmaker’s ranking as it steps toward an “Apple-esque ecosystem” of energy goods.
- On Thursday, the US will release details on initial jobless claims, factory productivity, and retail sales.
- The government’s sale of 30-year bonds was met with high interest, extending Treasuries’ profits.
- Bitcoin hit an all-time high as the cryptocurrency market turned positive ahead of Coinbase Global Inc.’s IPO.
- GameStop and AMC, which fell 11% and 8.5% on Monday, respectively, failed to recoup losses on Tuesday, with Morgan Stanley predicting heightened uncertainty in the market’s speculative pockets in the months ahead.
- Tesla up 8.60% to close at $762.32.
- Danaher up 3.41% to close at $243.84.
- NVIDIA up 3.09% to close at $627.18.
- Newmont Goldcorp up 2.71% to close at $62.25
- Diamondback up 2.54% to close at $75.76.
- Alliance Data System down 5.35% to close at $105.72
- Franklin Resource down 5.25% to close at $27.75
- PVH down 4.25% to close at $108.29
- Synchrony Financial down 3.92% to close at $41.46.
- Micron down 3.60% to close at $92.15
- The first-quarter earnings of banks and financial companies such as JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., Morgan Stanley, and Goldman Sachs Group Inc are expected to have an impact on the market performance.
- Consumer prices increased a higher-than-expected 2.6% in March, according to data released on Tuesday by the US Bureau of Labor Statistics, with fuel prices spiking 9.1% accounting for nearly half of the index’s price rise.
- Nairametrics, however, advises cautious buying in this era of growing uncertainties.
JAPAULGOLD, STERLNBANK surge, GUINNESS plunges
The All-Share Index decreased by -0.29% to close at 38,601.83 from 38,712.55 index points.
The Nigerian Stock Exchange market made another bearish run at the end of the trading session. The All-Share Index decreased by -0.29% to close at 38,601.83 from 38,712.55 index points.
- The Nigerian Stock Exchange market value currently stands at NGN 20.26Tr. Its Year-to-Date (YTD) returns currently stands at -4.14%.
- The market closed beneath expectation as JAPAULGOLD led 15 Gainers, and GUINNESS topped the chart of 18 Losers with a noticeable bearish movement by the NSE ASI.
- JAPAULGOLD up +8.70% to close at N0.75
- NAHCO up +7.39% to close at N 2.18
- STERLNBANK up +7.14% to close at N1.80
- STANBIC up +5.75% to close at N46.00
- CHAMS up +5.00% to close at N0.21
- GUINNESS down -9.91% to close at N24.10
- TRIPPLEG down -9.72% to close at N0.65
- NCR down -9.68% to close at N2.52
- CHAMPION down -9.09% to close at N2.00
- JAIZBANK down -7.69% to close at N0.60
Analysts’ predictions of a recovery in the market were halted by another bearish trend at the end of the trading session on Tuesday, though there is strong optimism that a recovery from the financial and consumer sectors will push the NSE-ASI back to profit.
Nairametrics advises cautious participation in the stock market in this era of growing uncertainties.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Friesland Campina Wamco Nigeria Plc announces AGM, proposes dividend of N6.74 per share.
- ETI appoints Akin Dada as Group Executive, Corporate & Investment banking.
- Union Homes REIT proposes final dividend worth N465.03 million for shareholders.
- GT Bank Plc holds FY 2020 investors presentation.
- Cornerstone Insurance Plc notifies stakeholders of late submission of financial statements.