2022 is the longest period of stagnation since the global IPO entered the global financial crisis. Investment banks predict that there will be no rebound in the short term.

(Bloomberg file photo)

[Financial Channel/Comprehensive Report] The combination of rising inflation and interest rate hikes aimed at curbing inflation has hurt stock market valuations and dampened investor interest in high-growth IPO candidates that have driven deals in recent years.

In 2022, the global initial public offering (IPO) has entered the longest period of stagnation since the global financial crisis. Investment banks do not expect a rebound in the short term.

"Bloomberg" reported that the surge in IPOs in China and the Middle East failed to offset the frozen U.S. market, and listings in 2022 raised only US$207 billion (approximately NT$6.3 trillion), a 68% decline from the same period last year.

Please read on...

Edward Byun, head of Asian equity capital markets at Goldman Sachs, said that the recovery of external capital market activities requires two conditions, the stability of inflation and the visibility of the path of interest rate hikes.

Byrne believes that inflation has peaked and the interest rate outlook is bright, and he will continue to pay attention to how the market develops.

According to "Bloomberg" data, the stock market plunge in 2022 is the worst since the 73% plunge in IPO valuations in 2008.

Previously, the stock market was quite prosperous in 2021, with IPO fundraising reaching a new high of US$655 billion (about NT$20 trillion).

But since then, high-growth tech companies that can't sustain profitability have fallen out of favour, and consumer goods companies have lacked investor support amid rising inflation.

The performance of these well-listed companies in 2022 did not meet expectations. According to statistics, the companies that debuted on the US stock market in 2021 have seen an average stock price drop of 19% since their IPO, including the once highly sought-after electric car. Startup Rivian, whose stock fell nearly 70%.

The U.S. IPO market has been one of the hardest hit, with backdoor listings propelling a surge in 2021, and the U.S. market has also been hit as blank-check company deals collapse.

The IPO scale in 2022 will be approximately US$24 billion (approximately NT$735.6 billion), the lowest since 1990 and a 93% drop from 2021.

Investors will favor IPOs from stable companies in 2023, according to investment banks.

UBS believes that China and the Middle East, two markets that have performed well in 2022, are likely to maintain this trend. As the Chinese government relaxes regulations on real estate and the epidemic prevention restrictions are gradually loosened, the market is expected to recover.

In the case of China's real estate crisis and the zero-clearing policy stance of the authorities remain unchanged, China's IPOs will still raise US$92 billion (about NT$2.8 trillion) in 2022, setting a new high; companies in the Middle East will raise nearly US$32 billion (about NT$ 980.8 billion).

Gareth McCartney, head of external capital markets at UBS, expects the IPO market to slowly normalize next year, with the U.S. likely to rebound first, showing signs of recovery as big deal activity picks up.

Europe will follow, and Asia's recovery will depend on the reopening of China, not the direction of inflation.

Andreas Bernstorff, head of equity markets at BNP Paribas SA, said listings in 2023 would be a mess, but the IPO market would only be open to a handful of industries.

Bernstorff pointed out that cyclical and value industries may see demand, especially companies in energy transition and climate-related technologies, which are well-positioned to attract strong demand.

Grasp the pulse of the economy with one hand I subscribe to Free Finance Youtube channel

Already added friends, thank you

Welcome to 【Free Finance】

feel good

Already liked it, thank you.

related news