Too late to list

Since its 2003 launch, the JSE`s Alternative Exchange (AltX) has done a great job attracting companies to its board for fledglings.

The ICT sector has been of particular interest to this bourse. As of 24 October, 14 of the 65 AltX companies - around 22% - fitted into this sector. Four more have either completed their listing process, or will have done so by the end of November.

On one hand, it`s good to see our sector so confident. On the other, I have to ask, is now the right time to list?

As finance minister Trevor Manual said yesterday in his mini-budget vote, the international economy is on shaky ground. Make no mistake, instability in First World regions - particularly the US and UK - will have an impact on the local economy and investment environment.

Outside of a handful of consistent performers, companies will have to do some serious convincing to build investor confidence in their stocks.

Kimberly Guest, senior journalist, ITWeb

Local analysts are quick to point out that international investors look to SA as a key region within a developing market strategy. When times are good in the rest of the world, this works in our favour. However, when times are unstable, the high liquidity of our markets works against us.

Companies entering the listed sector in the next few months will need to consider the impact of a broader environment on their ability to meet their listing objectives.

Another factor working to the disadvantage of new entries is a generally disappointing year from the ICT sector.

Analysts who cover our companies have more often than not been disenchanted at the financial performance of businesses that have been past favourites. The sector, they say, is not living up to its own promises.

This disillusionment will play a role in where investor money flows in the sector. Outside of a handful of consistent performers, companies will have to do some serious convincing to build investor confidence in their stocks.

Of course, the environment was markedly different this time last year when Dialogue, Celcom, Africa Cellular Towers and IFCA Technologies debuted on the board.

Buoyed by a booming economy, the tech sector was one to keep an eye on. While cautious of falling into another dot-bomb trap, investors noted the sector was to benefit from a general uptick in infrastructure spending.

Now the situation is different. There are many 'sure thing` stocks to choose from which will provide both earnings and a level of financial security. Few of these are in the ICT sector.

To my mind, companies entering the market now have missed the boat. They would do better holding out a little until the market stabilises. After all, the main reason for listing is raising money and right now investors are reluctant to fork out on a sector that has been less than reliable.