Opinion

It’s time to ban penny stocks from Australia’s flagship share index

If you want to attract and win the trust of serious overseas investors including sovereign wealth funds, pension funds, and asset managers you don’t want a flagship index pockmarked by penny stocks.

Tom RichardsonJournalist

Jun 26, 2023 – 11.00am

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Penny stocks are rearing their ugly heads on Australia’s flagship S&P/ASX 200 Index with alarming regularity, in a reflection of the market’s deteriorating quality, as the ASX shrinks for the first time in 18 years.

Last week, Australia’s flagship index resembled a penny stock casino, with shares in lithium explorer Lake Resources crashing 38 per cent to 29.5¢ after it revealed a six-year delay to its Argentinian lithium project. Speculative biotech Imugene finished the week at just 8.9¢, with tech hopeful BrainChip losing 13.8 per cent over the week to 34.5¢.

Tom Richardson writes and comments on markets including equities, debt, crypto, software, banking, payments, and regulation. He worked in asset management at Bank of New York Mellon and is a member of the CFA Society of the UK as a holder of the Investment Management Certificate.