Investment levels scale new heights

New equity raisings are forecast to surge to record levels of between $32 billion and $34 billion in 1999-2000, based on a survey by KPMG Corporate Finance.

The first annual survey of Australian capital markets says this represents an increase of more than 20 per cent on the $27 billion raised in 1998-99. The previous record was $29 billion in 1997-98.

Almost half of the new funds are coming from retail investors.

They are expected to contribute a record $9 billion in new funds including $6 billion for the first instalment of the Telstra 2 public offer.

The forecast $9 billion investment by retail investors in 1999-2000 represents a 50 per cent increase over the previous year.

The survey found telecommunications accounted for almost half of all new equity raised.

Property trusts and the banking and finance sectors were the next most active industries, raising $5 billion and $4 billion respectively.

KPMG Corporate Finance head Julian Vella said favourable economic conditions had increased the attractiveness of the equity market.

“In particular, Australia can be expected to remain highly attractive to overseas investors because of its low interest rate environment and our low Australian dollar,” Mr Vella said.

Mr Vella also said Internet-related stock had reared its head in 1998-99 – seven listings raised almost $250 million.

In the current year new issues are expected to raise about $300 million.

KPMG Corporate Finance Mergers and Acquisitions division head, Ian Knight said in the year to June 1999, internet-related stocks share prices gained an average 73 per cent.

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