The trend of “unicorn” listing and rising underwritings to their record continued in the second quarter of 2019, according to the EY-Global IPO trends quarterly report for Q2 2019. In spite of the persistence of geopolitical uncertainties 507 IPO transactions registered in the first semester of 2019, with a total value of USD 71.9 billion. Although the number of transactions declined by 28 percent compared to the first half of 2018, first day earnings on major markets rose by an average of 15.4 percent and post-listing prices rose 28.4 percent.
The technology, health and industrial sectors recorded the largest share of total IPO transactions in the first semester of 2019, cumulating 266 IPOs (52 percent of total IPO transactions), totaling USD 47.8 billion (66 percent of the capital attracted globally). Depending on the value of the capital attracted, technology was the most powerful sector, with underwritings worth USD 29.3 billion (41 percent of the value of the capital attracted globally).
Investors in the EMEIA region remain cautious due to the persistence of global uncertainties
In EMEIA, the number and value of transactions declined compared to the first half of 2018. The stock markets in this region registered 123 IPOs (a 53 percent drop) and attracted total capital of USD 16 billion (a 48 percent drop). Despite the difficulties, five of the top ten stock exchanges as transaction value and two of the top ten global stock exchanges came from the EMEIA. Overall, given the strong first-day returns, the performance of IPO transactions in the first half of this year and investor confidence, an increase in EMEA IPO market activity is expected in the second half of 2019.
In Europe, there was a notable increase in IPO activity in the second quarter of 2019. The number of initial public offerings increased by 100 percent (48 transactions) and the value of the capital attracted by 3.33 percent (USD 12.5 billion) from the first quarter of this year.
“EMEIA is a region more dependent on global trade than other regions and is therefore more sensitive to the persistence of geopolitical uncertainties. Given that the largest trade flows in the world are between the US and China, on the one hand, and the European Union, on the other hand, EMEIA has an indicator role in determining the health of the global economy. If the US and China resolve their commercial and tariff conflict, and the UK and the EU agree on conditions that lead to a Brexit agreement, we can expect IPO activity to recover in the second half of 2019. Between time EMEA IPO candidates continue to prepare to be ready to move to the right moment,” said Dr. Martin Steinbach, Coordinator of EY Global and EY EMEIA IPO.
IPO markets on the American continent are recovering
In the US, 87 initial bids were registered, totaling USD 28.1 billion in the second quarter of 2019, which meant a 5 percent increase in the number of transactions and 50 percent of the value of transactions compared to the second quarter of 2018.
However, at the level of the first semester of 2019, activity decreased by 14 percent, 118 transactions were recorded, and the value of attracted capital decreased by 12 percent to USD 33.6 billion, compared to the same period last year.
However, the NYSE and NASDAQ indices ranked first and second respectively in the global capital appreciation chart attracted in the first half of 2019. US stocks registered 75 percent of IPOs on the continent (88 IPOs) and 96 percent of the value of transactions (USD 32.2 billion) in the first half of 2019, following the public listing of several major “unicorn” technology companies in the second quarter of the year.
Initial public listing plans in the Asia Pacific region have been hurried to overcome economic turmoil
China-US trade continued to affect IPO activity in the first half of 2019, hindering a return to 2018 levels. IPO activity across the Asia Pacific region in the first half of 2019 saw a 12 percent drop in volume (266 transactions) and 27 percent of the attracted value (USD 22.3 billion) compared to the first half of 2018.
However, Asia-Pacific exchanges have maintained their domination on the global IPO market this semester, as a volume, six of the top ten stock exchanges in the world coming from this region. In terms of attracted capital, three of the top ten scholarships are from this region. Asia-Pacific main markets recorded first-day average returns of about 19 percent and average current yields of 34 percent, which means that the performance of IPO transactions continues to improve investors’ attitude towards them.
Mainland China scholarships recorded 27 percent more IPO transactions (33) in the second quarter of 2019 compared to the same period of the previous year, but also a 38 percent drop in attracted capital value (USD 5.1 billion), due to the absence of IPO megatranzactions. But an increase in IPO activity in mainland China is expected in the second half of this year as a result of the launch of the STA platform on the Shanghai Stock Exchange.
IPO markets in Japan remained stable in the first half of 2019, recording a slight increase in transactions over the same period last year. There were 41 IPOs in the first half of 2019 against 39 IPOs in the same period last year, while the value of the attracted capital (USD 1.3 billion) was significantly lower than in the first semester of 2018 (USD 2.8 billion).