Brian Salter
The Australian Stock Exchange (ASX) and the Financial Services Institute of Australasia (Finsia) will join forces to increase the research coverage of medium-sized ASX-listed companies.
The pair has signed a heads of agreement to commence the two-year pilot scheme starting in 2007, giving investors access to equity research for a larger range of companies than is currently available.
Finsia will administer the scheme, allocate companies to research providers and distribute the research reports.
Independent and broker research providers ABN AMRO, Aspect Huntley Morningstar, Wilson HTM, Macquarie Bank, Property Investment Research and E.L.&C. Baillieu have so far agreed to participate in the trial.
The Equity Research Scheme will be available to companies with a market capitalisation between $70 million and $700 million as at June 30, 2006.
Depending on the success of the initiative, ASX and Finsia may extend the offer to listed companies with a capitalisation below $70 million.
A fee-for-service basis will be applied in order to cover any administration and other additional costs incurred by the scheme.
ASX group executive of business development Peter Hiom believes the scheme will benefit the market in three ways.
“It will assist investors to make more informed decisions for stocks that currently receive little or no coverage; it will assist companies to attract investment by increasing investor awareness; and finally for the ASX and the market as a whole, it will create a more liquid and therefore more attractive market,” he explained.
Adding to this, Finsia chief executive Brian Salter said the offer would improve the overall efficiency of the market.
“By connecting equity analysts and underexposed companies, we are providing the tools for both sophisticated and ‘mum and dad’ investors to broaden their portfolios,” he said.
“There will always be plenty of diamonds among the near-2,000 companies listed on the ASX and access to quality independent research will assist in their discovery.”
