Daily Brief: New Stock Market Listings Have Fallen Off A Cliff This Year

Daily Brief: New Stock Market Listings Have Fallen Off A Cliff This Year

over 1 year ago3 mins

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Data out over the weekend showed that the global value of initial public offerings (IPOs) has nosedived this year.

What does this mean?

2021 was the busiest year ever for stock market listings, as companies scrambled to go public to make the most of sky-high valuations. But the war, rising inflation and interest rates, and the threat of global recession have conspired to make markets choppier and companies more timid. That much is clear from the latest data, which shows that the value of global IPOs was 71% lower in the first five months of this year than the same time in 2021. The collapse was especially stark in Europe and the US, where the value of new listings has tumbled more than 90% this year. And you don’t have to look far to pin the blame: the regions have hosted just two of this year’s 10 highest-valued IPOs, and the SPAC boom – remember SPACs? – has faded as quickly as it arrived.

SPACs disappear

Why should I care?

The bigger picture: No pressure.

There are still some major IPOs in the pipeline that could give the market a boost, mind you. GlaxoSmithKline’s consumer health business Haleon is expected to be the biggest listing in London for a decade, while insurer AIG’s life and asset management segment is set to be valued at over $20 billion when it joins the stock market. And let’s not forget Porsche: its parent-company Volkswagen is planning to list a number of the luxury carmaker’s shares on the market later this year.

US IPO proceeds

Zooming out: It’s all coming up energy.

Analysts have also speculated that sky-high oil and natural gas prices will make energy and energy-adjacent companies more likely to list on the stock market. And there are already signs that’s playing out, with listings on energy-heavy Gulf stock exchanges on track for their best first half-year ever. Just look at Borouge: the chemicals company – which is co-owned by oil company ADNOC – just raised $2 billion in Abu Dhabi’s biggest-ever listing last week.

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China’s National Holiday Spending Suggests A Rebound

China image

Data out on Monday shows China’s economic dropoff may finally have reached a turning point.

What does this mean?

Chinese Covid cases are easing up and the country is back in business: Beijing greenlit in-person store and restaurant services on Monday, while Shanghai – which has been locked down for the best part of two months – continued with a reopening that kicked off last week. It’s already having the desired effect: data from the Dragon Boat Festival weekend showed that tourism spending was only down 12% on last year – a drop, sure, but way less than the 43% plunge recorded over the last national holiday in May. Some economists think it’s a telltale sign of a recovery, and they suspect it’ll only pick up pace from here on out. Investors seem to agree: they sent the country’s stock market up around 2% on Monday.

Outbreak over

Why should I care?

Zooming in: Don’t count your chickens.

But this isn’t going to be an overnight recovery, with separate data on Monday showing that China’s services sector shrank more than expected last month on the back of still-dwindling supply and demand. People living in cities like Beijing, after all, require negative Covid tests as often as every 48 hours to access public venues, and there’s always the very real possibility of yet more lockdowns.

China services

The bigger picture: China’s win is our win.

The Chinese government has recently introduced measures to bring production back stronger than ever, which economists think will also reduce costs. That should allow manufacturers in “the world’s factory” to lower the amount they charge their overseas customers, which could in turn encourage those companies to reduce the amount they make us pay. That might be why some economists are hoping that China’s efforts to get back on its feet could help bring down global inflation.

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