Mr Cunningham said difficult market conditions and competition from private capital meant companies were staying their hands when it came to floating, opting instead for trade sales or private equity-style transactions.
“Private money is continuing to be a major competitor to public market offerings and I see no reason why that will change,” he said. “In fact, this might become more pronounced in the next couple of quarters. January [and] February probably is unlikely to get fresh money coming into the market.
“You’ve got volatility, you’ve got year end, you’ve got fund managers wanting to make performance mandates and de-risk, particularly if they’ve had a good year.”
“I think there’s a general reluctance on companies – that particularly are early-stage and looking for institutional money – for people to sort of take those bets in the last quarter of the year,” he said.
Despite the slump towards the end of last year, the ASX said 2018 was still “healthy” for listings, pointing to a number of large floats that made it on to the boards in the past 12 months.
“The highlights of the year were the Coles demerger, which was the biggest listing by market cap that we have on record,” said Mr Cunningham.
“In addition to that, we had the biggest [initial public offering] since Medibank – which was the Viva Energy IPO – and then we had our two biggest mining IPOs in close to two decades.”
However, while more than 130 companies listed on the ASX last year, some big floats never made it to market.
“It has been a good year but of course we’ve seen deals shelved, delayed, go private,” said Mr Cunningham. “If we think about it the most notable ones are obviously Colonial [First State Global Asset Management] and PEXA.”
He said PEXA was an added disappointment, with the property exchange attempting to cultivate an environment more attractive to high-quality technology companies.
“We were probably a little disappointed that we didn’t have a few more bigger tech companies come through the market,” Mr Cunningham said.
The ASX had engaged with a few unnamed big technology firms that were looking to list in the second half of last year but these had decided to hold off in the face of elevated market volatility and a slide in global tech stocks.
“The market [is] very hungry for tech but it’s quality tech [they want],” Mr Cunningham said.
“The tech that we’ve had come [to market] in 2018 has been smaller, a bit more speculative and a bit more early-stage. What people are hungry for is another WiseTech, They’re hungry for another Xero and they’re hungry for another Appen.”
Mr Cunningham said there were two to four “high-quality” tech companies waiting to float when the time was right.
“Those companies have all scouted around the market even as recently as a month ago and refreshed whether they are IPO-able in the current environment,” he said.
“They’ve all got green lights from the market, so for them it’s a question of when do we want to come to the market. I’m hopeful that we get one or two really good-quality tech [floats] in 2019, but we might have had the same conversation this time last year as well.
While the ASX’s understanding of technology stocks may still be in its infancy, the Australian sharemarket has continued to be the benchmark for materials, raising 99 per cent of global public mining capital in 2018.
“I think mining is coming back and it doesn’t feel like it’s coming back in boom times, but there’s mining projects that need funding,” Mr Cunningham said. “[A few years ago] commodity prices meant most of these projects were not profitable. They’re profitable now.
“We are getting a lot of inbounds from Canada and a few inbounds from South Africa as well, so I think it will continue to be a theme.”