The U.S. share of global initial public offering activity has dropped from about 40% 10 years ago, to less than 14% these days, reports Russell Investments.

It reported that the U.S. share of IPOs added to the Russell Global Index has declined from 39.9% in 1998 to 13.7% for the past three quarters. “Last year we saw the lowest number of U.S.-based IPOs added to the global index since 2003, but this year it’s even lower for both the U.S. and global markets,” said Mark Thurston, head of global equity research at Russell Investments.

In the three quarters since the Russell Global Index was reconstituted last June, only 24 of the 70 countries represented in the index generated any IPOs eligible for inclusion, it noted; and the U.S. accounted for just seven of the 51 IPOs added to the global index. The Russell China Index also accounted for seven, while the Russell UK Index added six and the Russell Indonesia Index added four, it said. They were followed by seven countries that added two IPOs each: Hong Kong, Mexico, Morocco, Singapore, South Korea, Spain and Taiwan.

The firm says that a look back at the past decade shows a steep decline in IPO activity. In 1998, 618 IPOs from 47 countries were added to the global index, and the United States accounted for 247 of them, putting it far ahead of the second place UK, which had 48 IPOs, Japan with 42, Germany at 33, and Taiwan with 18.

“IPO activity indicates how well certain markets are performing in terms of real demand for goods and services,” said Thurston. “It is clear from the dramatic decline in the last year that the global recession has created an inhospitable environment in which to introduce an IPO.”

Thurston also noted that, “While a few IPOs have performed very well since coming to market earlier this year, the number of IPOs is expected to be lower for the remainder of 2009 than it has been in recent years. This reduced IPO activity limits the flow of capital to potentially promising companies.”

IE