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The German stock exchange has announced that it is to close the Neuer Markt, ending Germany's brief infatuation with hi-tech equities.
A total of 343 companies went public on the exchange, although there are only 264 companies still listed on it, which specialised in giving small hi-tech companies access to the European stock markets. Irish companies that are listed on the Neuer include electronic payments security firm Trintech and directory enquiries company Conduit.
Deutsche Boerse AG, which operates the German exchange, is to close the market by the end of the year and to move the 264 listed companies into other segments of the German stock exchange.
"The closure of the Neuer Market is bad for hi-tech firms looking to raise money, but it's part of a larger issue," said Peter Jackson, an analyst with Bloxham Stockbrokers in Dublin. "Investors just don't want to invest in hi-tech companies at the moment."
"One of the problems with the Neuer was that the financial regulations were lax," said Jackson. "Many of the companies listed didn't have the financial capability to be on the exchange."
Jackson said that in most cases, an ordinary stock exchange listing required a company to have a trading history, be profitable and be capable of producing reliable financial reports. Many of the companies listed on the Neuer did not meet these criteria, he said. "The normal rules were relaxed for the Neuer because of the perception that you had to have Internet stocks in your portfolio in order to have a balanced portfolio."
The 66-month-old technology-heavy Neuer Markt, once considered Europe's answer to the US Nasdaq stock market, has plunged 95 percent from its high two and a half years ago at the peak of the Internet bubble.
The exchange has very little trading volume and only one company has gone public in more than a year. A number of companies have announced that they would de-list from the Neuer Markt. Irish company Conduit for example has said in recent weeks that it plans to move its primary listing from the Neuer Markt to London, but has not specified when it plans to make the move.
The announcement of the closure comes in the same month that the German government said it would bail out MobilCom AG, the first company to go public on the Neuer Markt.
Two months ago, Swiss Exchange stopped marketing its SWX New Market segment. But, both Euronext NV and the Madrid Bolsa said they have no plans to scrap or tinker with their growth segments.
The ITEC exchange, the Irish equivalent of the Neuer, was launched eighteen months ago. The ITEC has less stringent rules for listing than the ISE, but only four IPOs have taken place on the ITEC and there have been no IPOs on the exchange since the Nasdaq peaked in the spring of 2000.
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