Quarterly volume since 2012 - Deloitte United States

[Pages:24]European IPOs at their lowest quarterly volume since 2012

European Equity Capital Markets Review ? Q1 2019

Contents

Introduction

4

Market performance

6

ECM Review

12

ECM Hot Topic: IPO Readiness

17

Final thoughts

22

About us

23

3

European IPOs at their lowest quarterly volume since 2012 | European Equity Capital Markets Review ? Q1 2019

Introduction

The main equity indices had one of their best first quarters' performance in recent years due to the progress in trade negotiations between the United States and China and the significant decrease in volatility. However, the growing uncertainty surrounding Brexit and the measures taken by central banks as a result of lower growth perspectives shaped a quarter in which the level of ECM issuance has fallen by 50% compared to Q1 2018, making it the weakest first quarter since Q1 2003.

Our European Equity Capital Markets Review publication analyses capital markets and key themes driving their performance. This report includes comments and practical insights into key areas that could impact the IPO market.

In this second issue, we look deeper into the process that companies and shareholders must go through to be "IPO ready" and meet all regulatory, investors and broader market requirements for listed companies.

This publication, which is issued on a quarterly basis, reviews the equity markets' activity during the first quarter of 2019.

The first three months of 2019 saw a positive start to the year for global stock exchanges, with the main indices recovering most of their previous losses from the last quarter of 2018. Most of the gains were made during January and February. Gains were slightly lower in March, as investors became more conservative as a result of the Brexit outcome approaching.

Among the main factors that impacted stock markets during the quarter were the negotiations between the United States and China, the possible Brexit outcomes, central banks' monetary policies and the decrease in volatility.

Although volatility has returned to September 2018 levels, European ECM transactions decreased significantly compared to the first quarter of 2018, with several companies that were ready to go public waiting to find a better window once the Brexit outcome is clear.

In what has been the weakest quarter of ECM issuance since Q2 2012, the UK has been the market with the most ECM transactions in Europe by both number and volume of deals. Germany did not have a single IPO during the first quarter of 2019, which is negative compared to its issuance levels in Q1 2018, when 2 mega IPOs were priced (Siemens Healthineers & DWS both of which had values greater than 1bn).

4

Introduction

There has been no IPOs in Spain's Main Market so far this year. With only 8 transactions, the first quarter of the year had the same number of deals and volume as Q1 2018 in Spain. Compared to other Q1 of recent years the start to 2019 has been relatively weak.

In addition, there was no significant activity in the Spanish Alternative Market (MAB), with only one growth company and four REITs listing during the period.

We hope you find this report interesting and useful. Both ourselves and the wider ECM / IPO team at Deloitte would be delighted to discuss any aspect of this report with you.

Despite a positive start to the year for the main stock exchanges and volatility levels, the number and volume of European IPOs fell in Q1 2019 by 73% and 94% respectively compared to Q1 2018.

Alejandro Gonz?lez de Aguilar Debt, Capital & Treasury Advisory Partner

Javier Fern?ndez-Galiano Debt, Capital & Treasury Advisory Director

5

European IPOs at their lowest quarterly volume since 2012 | European Equity Capital Markets Review ? Q1 2019

Market performance

6

Q1 2019

Market performance

8.2%

IBEX 35 performance

12.3%

Stoxx Europe 600 performance

13.1% -46.1%

S&P 500 performance

VIX performance

/$: 1.1218

-2.0% in Q1 2019

/?: 0.8606

-4.2% in Q1 2019

Brent: $68.4

+26.3% in Q1 2019

7

European IPOs at their lowest quarterly volume since 2012 | European Equity Capital Markets Review ? Q1 2019

Stock markets benefitted from improvements in trade negotiations and the decrease in volatility...

Following a disappointing last quarter of 2018, the start to 2019 has been positive for global stock markets with the US's main indices trading significantly up (the S&P 500 was up by 13.1% and the Nasdaq 100 was up by 16.6%). European indices followed a similar upward trend (the Stoxx 600 was up by 12.3%, the FTSE 100 was up by 8.2% and the IBEX 35 was up by 8.2%). January was the strongest month for indices with solid upsides (the S&P 500 was up by 7.9%, the Nasdaq 100 was up by 9.1%, the Stoxx 600 was up by 6.2%, the FTSE 100 was up by 3.6% and the IBEX 35 was up by 6.1%). However, as the Brexit deadline approached, the indices' growth diminished.

Trade tensions

Volatility

Brexit

Central banks' policies

Brexit has been 2019's key topic of conversation to date. The UK had been expected to leave the European Union on 29 March 2019. However, following a House of Commons vote on 14 March, the Government sought permission from the EU to extend Article 50 with Theresa May requesting an extension period until 30 June. This was followed by the EU offering a short extension until 22 May on the condition that a positive vote on the withdrawal agreement was achieved by the following week; if a deal could not be agreed the UK would have to propose a way forward by 12 April 2019. One day before such deadline the European leaders agreed to delay Brexit until 31 October, with a review at the end of June. This new extension allows the UK to leave the union on an earlier date if a withdrawal agreement is ratified prior to such deadline.

Another topic impacting markets during the first quarter of 2019 was the progress in trade negotiations between the US and China, with the aim of reaching a trade agreement. On 24 February, Donald Trump announced a delay in tariff increases on Chinese goods due to `substantial progress` in trade talks.

Central banks have also played a crucial role this quarter in defining market trends. In January, the US Fed put the ongoing policy tightening cycle on hold and in March said "the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate", therefore implying that no more rate hikes are expected in 2019.

In February, the Bank of England warned that the economy was on course for its weakest year since the global financial crisis. Therefore it left interest rates on hold while cutting its 2019 growth forecast from 1.7% to 1.2%, blaming Brexit uncertainty and slowing economic growth as the main drivers.

Similarly, the ECB has reacted to the threat of recession across the Eurozone with the promise to keep interest rates at historically low levels for at least the rest of the year. It has also announced the relaunch of liquidity injections starting in September 2019. The announcement followed the ECB's decision to sharply cut its 2019 Eurozone growth forecasts from 1.7% to 1.1%.

8

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download