Stock Market Week: Rejuvenated Easdaq plans Nasdaq listing
Monday 15 March 1999
The moves towards listing its own shares come at a time when Easdaq is indulging in a sudden burst of activity after what most observers regard as a rather subdued first 30 months of existence. The market has 40 constituents, quoted in the currency of their choice, with a combined worth of some pounds 7.5bn. There must, however, have been hopes that the number would be comfortably above the half century by this stage of the market's development.
Easdaq is raising pounds 18m from existing and new shareholders and seems to be winning over Israeli companies which hitherto had favoured Nasdaq, a small shareholder in Easdaq. The next recruit will be IT International Theatres, Israel's largest cinema chain, with Supercom, a software group involved in passports and visas, due shortly afterwards.
Easdaq sees itself as a market largely for small, high-tech companies but is prepared to spread its net far and wide. British constituents include Debonair, the airline which is the only share traded in sterling, and Grainger Telecom.
Memory Corporation, the computer group which had an eventful but ultimately disastrous time on the Stock Exchange's Alternative Investment Market, is the only company to switch from a London listing to Easdaq, a journey which did not provide universal enjoyment.
Britain's Dr Solomon's, producing anti-virus software products, was the founder member; it has since gone out in a blaze of glory through a takeover bid.
Although it is based in Brussels, Easdaq has a strong British representation. Its shareholders include stockbroker Beeson Gregory and approaching 30 domestic investment groups are members. The latest to sign up is Hoodless Brennan, which specialises in dealing for small investors.
It is estimated that around 80 per cent of Easdaq's volume is provided by institutional investors with private shareholders accounting for the rest. But there is not much interest from Britain's big private army.
This could be due to the cost of trading although it could be the impression of high charges is due to factors outside Easdaq's control. For example, the cost of nominee accounts - essential when old-fashioned paper goes out of the window - are not the responsibility of the Exchange. The expense of a small pounds 1,000 execution-only deal is high by British standards. It would cost around pounds 50 with a custody charge of pounds 30 for a year or part of a year.
The arrival of Hoodless Brennan could be a clear indication that the market intends to court Britain's private investors and there could be an attack on the cost structure.
It is, however, relatively simple to deal. All a private investor should need to do is contact his stockbroker who, if not a member, puts the order through a member firm which, in turn, trades with the recognised market makers. Half-a-dozen leading private client brokers, although not members, have indicated their willingness to take on Easdaq business.
The market is screen-based, quote-driven and uses the multiple market- maker system, similar to Nasdaq and the stretches of the London market not on the computerised order book.
Although Euroland is spawning much more cross-border investment there are still almost 30 equity markets in Europe, mostly with sharply different accounting and regulatory systems. Easdaq feels it should seek its primary share presence on another market as it should be seen to be prepared to accept the disciplines of a "foreign" exchange, even one which is something of a mirror image. But it is likely there will also be a secondary listing and that will, of course, be on Easdaq.
Only one European market, Stockholm, is a quoted operation. Most are member-owned co-operatives or controlled by financial institutions. London's Stock Exchange thought about a share quote but eventually dropped the idea. It has around 350 corporate members.
Kingfisher, the Comet to Woolworth's chain, will underline the increasing Europeanisation of the investment scene by announcing its year's figures in Paris on Wednesday. The idea is to illustrate the group's role as a pan-European retailer.
Its French Darty retailing spread is expected to outperform the British side with profits up 12 per cent to pounds 120m. B&Q, the do-it-yourself chain, will produce the best home-grown contribution with an 8 per cent gain to pounds 175m. Overall Kingfisher, believe BT Alex.Brown, will achieve profits of pounds 559.2m, an 11 per cent gain.
Other leaders on the profits schedule include Smiths Industries and Telewest Communications. Mid caps are prominent with a clutch of engineers reporting.
Smith, with aerospace and medical interests, is expected to produce interim figures nudging pounds 100m against pounds 89.3m and Telewest, as befits a high-tech cable company with a roaraway share price, will check in with another loss, say pounds 300m, little changed from the deficit managed a year ago. Elsewhere engineers Cobham should manage pounds 62.m (pounds 52.3m) and Charter pounds 82.5m, down from pounds 94.1m.
Brent Chemical could reveal the conclusion of its long-running take- over talks when it announces figures, perhaps pounds 6.8m against pounds 9.3m. Laporte, where takeover whispers have been heard, should manage little changed profits of pounds 131m.
Eurotunnel, up 11p to 98.5p, the highest for more than two years on Friday, is expected to be in the black today - a profit of pounds 60m against a pounds 600m- plus loss last time is the guess. But it is all something of an illusion. Exceptional items linked to the group's debt restructuring are largely responsible.
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