U.S. capital market competitiveness remained weak through the second quarter of 2016.
“The global competitiveness of U.S. capital markets has continued to decline in the first half of 2016,” said Harvard Law Professor Hal S. Scott, Director of the Committee on Capital Markets Regulation. “Objective measures continue to indicate that our public capital markets are not on the road to competitive recovery.”
The U.S. share of global IPOs by foreign companies remains disappointing at only 3.1%. Through the second quarter of 2016, the U.S. continued to attract a historically low percentage of global IPOs by foreign companies. This measure remains lower than the 3.6% recorded for full-year 2015, which was the lowest annual share since 2008, and far below the historical average of 26.8% (1996-2007).
Foreign companies that did raise equity capital in the U.S. in the first half of 2016 did so overwhelmingly via private rather than public offerings. Over 95% of initial offerings of foreign equity in the U.S. were conducted through private Rule 144A offerings rather than public offerings, a level comparable to the 95.2% observed for full-year 2015. This measure of aversion to U.S. public equity markets remains significantly higher than the historical average of 66.1% (1996-2007).
The U.S. share of the 20 largest global IPOs stands at 1 out of 20 in the first half of 2016. This is a substantial departure from the historical average of 20% (1996-2007). The CCMR believes that the policy recommendations in its 2006 Interim Report remain essential to the restoration of U.S. competitiveness. “We urge regulators implementing the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act to minimize the adverse competitive effects of new regulations, particularly in areas where the U.S. regulatory approach differs significantly from competitor markets,” said Scott.
Historical data are available at www.capmktsreg.org.
| Measure | Historical Average | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | Through Q2 2016 |
| 1. U.S. Share of Equity Globally Raised in Public Markets | 1996-2007:
31.1% |
24.6% | 30.0% | 42.7% | 49.8% | 40.1% | 31.1% | 23.6% | 30.5% |
| 2. U.S. Share of Global IPOs by Foreign Companies (Broad Definition, By Value) | 1996-2007:
26.8% |
16.9% | 14.2% | 8.6% | 11.4% | 7.0% | 26.0% | 3.6% | 3.1% |
| 3. U.S. Share of 20 Largest Global IPOs | 1996-2007:
4 of 20 |
2 of 20 | 1 of 20 | 3 of 20 | 1 of 20 | 0 of 20 | 2 of 20 | 0 of 20 | 1 of 20 |
| 4. Rule 144A IPOs by Foreign Companies as % of Total Global IPOs in the U.S. (By Value) | 1996-2007:
66.1% |
70.2% | 79.3% | 82.5% | 84.5% | 89.0% | 64.4% | 95.2% | 95.6% |
| 5. % of IPOs by U.S. Issuers Listed Only Abroad (By Number) | 1996-2007:
1.9% |
3.0% | 5.2% | 6.9% | 0.7% | 3.3% | 2.6% | 4.3% | 2.8% |
| 6. Equity Raised in the U.S. by Foreign Issuers via Rule 144A BONY ADRs | 2000-2007:
$2.5b |
$738m | $771m | $1.32b | $3.57b | $1.51b | $1.29b | $9.29b | $3.34b |
| 7. Equity Raised via Rule 144A ADRs as a % of Equity Raised by Foreign Issuers in the U.S Public Market | 2000-2007:
10.6% |
4.1% | 3.8% | 6.3% | 26.5% | 5.7% | 2.2% | 34.63% | 23.82% |
| 8. No. of Foreign Companies Cross-Listings in the U.S. | 2000-2007:
17 |
5 | 7 | 11 | 9 | 9 | 5 | 2 | 6 |
| 9. % of Foreign Companies Delisting from the NYSE | 1997-2007:
6.3% |
4.2% | 6.0% | 5.8% | 5.3% | 6.0% | 3.8% | 5.0% | 4.8% |
| 10. U.S. Share of Global Market Capitalization | 1990-2007:
42.7% |
32.4% | 31.5% | 33.0% | 35.0% | 37.9% | 41.4% | 39.9% | 38.9% |
| 11. ADR Trading Volumes as a % of Ordinary Share Trading Volumes in Home Markets | 2001-2007:
17.9% |
18.5% | 22% | 20.9% | 11.0% | 47.8% | 10.8% | 12.9% | 15.1% |
A pdf of this release is available here.
* * *
For Further Information:
Hal Scott, Director, Committee on Capital Markets Regulation
hscott@law.harvard.edu