The World Federation of Exchanges (WFE) has published its Q1 2020 and full-year 2019 market highlights, with the aim of helping to better understand the intensity of the shock the global economy has experienced over the last quarter, including the +18 trillion USD wiped out by the COVID-19 crisis.
In the first quarter of 2020, the global number of IPOs and the amount of capital raised significantly increased from the first quarter of 2019. Even in March, the most affected month of the quarter, we still saw more than 70 IPOs worldwide, raising more than 5.5 USD billion, according to the WEF.
The report analyzes how the market followed the geopolitical and trade tensions in 2019 and how fears of a global economic slowdown receded as tensions showed some respite. By the end of the year, domestic market capitalization reached record high levels in markets across the globe, and investment flows through IPOs substantially increased.
On the downside, there were significant declines in new listings through IPOs. Specific events have triggered the sentiment in 2019, including Saudi Aramco’s Initial Public Offering (IPO), the lowering of interest rates by the US Federal Reserve, and some large IPOs in the technology sector, including Pinterest.
Nandini Sukumar, Chief Executive Officer of the WFE said: “Markets have remained open, supporting the economy during this crisis. The industry’s long-running commitment and investment in business continuity planning has enabled markets to provide funding solutions for those who need it, risk mitigation and management for those who need it and for investors to take a view on the economy and on growth. As an industry, we look forward to helping rebuild the global economy.”
Pedro Gurrola-Perez, Head of Research at the WFE said: “To better assess the impact of the economic shock of Covid-19 on markets across the globe, we have produced a report that brings together the highlights of 2019 with an update of the first quarter of 2020. When looking at the data, one cannot overstate the fact that, even during the worst days of the crisis, markets remained resilient and continued facilitating the transfer of funds in the real economy.”
Key highlights in 2019 and Q1 2020 include: Global domestic market capitalisation in 2019 was up 25.58% relative to end-2018. All three regions enjoyed an increase in market capitalisation: the Americas up 19.44%, the Asia Pacific up 30.0%, and EMEA up 31.9%. At the end of Q1 2020, domestic market capitalisation amounted to 73.14 trillion USD, a 13.61% decrease when compared to Q1 2019. All regions were equally affected: the Americas region lost 17.28% of its value, the Asia-Pacific region 12.76%, and the EMEA region 7.11%. The move was even more marked compared to Q4 2019: Global decrease: -20.75%; Americas: -22.18%; Asia-Pacific: 17.48%; EMEA: -22.79%).
In 2019: the value of trades in equity shares was down 7.7%, but the number of trades was up 13.0% when compared with 2018, the contrast explained by regional trends. For value traded, Asia-Pacific’s uptick of 10.9% was not large enough to outpace the downtick in both the Americas (-15.37%) and EMEA (-15.3%); and for the number of trades, Asia-Pacific’s increase of 23.3% versus the Americas down 1.7% and EMEA also down 2.7%, was enough to drive a positive global trend.
As of the end of Q1 2020: the value of trades in equities amounted to 32.5 trillion USD, an increase of 36.13% globally when compared to Q1 2019. All regions were positive: the Americas region saw a 42.29% increase,
the Asia-Pacific region a 25.97% uptick, and the EMEA region a 42.16%
increase as compared to Q1 2019.
In 2019, new listings through IPOs were down 25% but investment flows through IPOs were up 12.2% on 2018. The combination of the decrease in the number of IPOs and the increase in the amount of funds raised suggests that companies going to market over the course of 2019 were, on average, larger in size: indeed, average investment flow per listing in 2019 was 166.2 million USD, as opposed to 113 million USD in 2018.
In Q1 2020: a total of 225 new companies listed on stock markets through IPO. The number of IPOs was 6.9% larger than in Q1 2019, though 53.97% lower to Q4 2019. Despite the COVID-19 outbreak, February and March 2020 did not see a plunge in the number of IPOs: 74 companies listed through IPO in February 2020, and 73 in March. These figures are comparable to and even higher than several 2019 monthly figures.
