Headlines 2013

The Decline and Fall of the Stock Market

2013-11-28


Alexander Ljungqvist , Professor of Finance and Entrepreneurship at New York University's Stern School of Business and affiliated to IFN , launched a breakfast seminar entitled The Decline and Fall of the Stock Market . Primarily he explained how the U.S. market works and explained that the number of IPOs have become fewer, yet larger . Alexander Ljungqvist's introduction was followed by comments by Börje Ekholm, CEO of Investor and Chairman of NASDAQ OMX and Magnus Billing, CEO of NASDAQ OMX in Stockholm.

From left Alexander Ljungqvist, Börje Ekholm and Magnus Billing. Photo: Karl Gabor.

 

“The number of IPOs on U.S. exchanges has declined dramatically,” said Alexander Ljungqvist and explained that the same trend can be seen in Scandinavia - with the possible exception of Norway. “IPOs will soon be as rare as unicorns," he joked.

In 1997 almost 7,500 U.S. companies were listed. The corresponding figure last year was just over 3,600. Ljungqvist further clarified that the venture capital company's divestment of companies, or interests in any, to a large extent has been replaced with mergers and acquisitions.
 

Michael Treschow

The seminar was opened by IFN 's chairman Michael Treschow. Photo: Karl Gabor.
 

Alexander Ljungqvist specified a number of reasons why the outlook for stock exchanges is bleak. He argued, among other things, that the growing burden of legislation and regulations is detrimental. At the same time, competition has increased from other sources of capital such as venture capital, angel investors and so-called crowd funding.

So what will happen? Alexander Ljungqvist stated that :

  • Stock exchanges are still the most effective way to raise capital for growth - but the gap to other sources of funding is decreasing.
  • Difficult for ordinary small investors to share the wealth created in the economy when many companies are privately owned. On the other hand, the capital of private companies holds more in the long term. The same applies to investment incentives.
  • Stock markets will play a central role also in the future , commented Börje Ekholm, Investor.

     

Alexander Ljungqvist

Alexander Ljungqvist, Professor at New York University and affiliated to IFN , launched the seminar. Photo: Karl Gabor.

 

Ekholm explained that Swedish companies that have chosen to be listed on a stock exchange are much better at creating jobs than other companies.

Magnus Billing, Stockholm Stock Exchange, said that the downward trend has been broken in terms of IPOs. Billing and other participants discussed what can be done for small and medium sized businesses to improve access to capital. He noted that 90 percent of all trading is the trading of large companies.
 

publik

The seminar at Näringslivets house was fully booked. Photo: Karl Gabor.
 

All present agreed that laws and regulations need to be simplified. Börje Ekholm gave the EU a rebuke explaining that Swedes need to be present in Brussels at all times to bring to an end this "never ending battle".
“Politicians have a weakness for regulating publicly traded corporations, reflected Magnus Billing.

The influence of small investors, in their capacity as equity holders, was debated amonf the panelists and in the audience.

From the seminar in EFN tv

Listen to Ekonomiekot Lördag (Swedish Public Radio)
 


 

Download Alexander Ljungqvist's presentation


 

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