Chapter 1
2021: a year of hope and possibility
The future of the global economy is looking brighter, but challenges lie ahead.
With today’s low-interest-rate environment, plus increased first-day returns from IPOs, more retail investors are investing in the stock market to look for better returns. The share price of many new economy and technology companies have made significant advances in 2020. However, investors should beware of potential volatility ahead. We could see investors selling shares as soon as they see signs of market uneasiness, in the hope of locking in their gains from 2020. This would add to any market correction.
Will this change last?
Most organizations have changed how they operate because of the pandemic, but some of these changes will likely last longer than others. In 2021, organizations will continue to review their costs — from staff structures to outsourcing — to reduce inefficiencies, preserve to survive and to free up capital to invest in future opportunities.
Even with a vaccine, the widespread practice of remote working will not vanish overnight. Like online shopping and video calls with family and friends, people have become used to working from home. This will pose a challenge for both employers, conscious of their spend on office space, and those banking on a revival of commercial property prices.
At present, almost 14% of the office space in Midtown Manhattan is empty, the highest rate since 2008. Although many yearn for the social atmosphere of the office, it is increasingly unlikely that most employees will return to their desks full time. A hybrid model is likely to emerge, but it will be difficult for employers to achieve a perfect balance for all employees.
IPO candidates should beware of any potential market correction, especially for those companies that have seen their share prices making substantial gains from the market rally in 2020.
With the benefits of remote working technology made clear, organizations have also learned to rely less on business travel for decision-making purposes and instead saved money (and reduced carbon emissions) through virtual interactions. In the IPO sector alone, virtual roadshows have given companies access to a wider pool of investors, and have reduced the time and money involved in doing a conventional campaign.
Although the COVID-19 pandemic has been one of the biggest challenges most organizations have had to face, it has also highlighted what is possible. The speed with which the more successful and adaptive companies reacted to the needs of customers, and the capabilities they deployed, clearly demonstrate their capacity to think innovatively, quickly.
What to expect from those who lead?
Businesses around the world are gearing up for a new US administration under President Joe Biden. Biden’s administration faces a number of challenges, not least a raging pandemic and entrenched partisanship, but also the renewal of relationships with foreign governments and public organizations such as the World Health Organization. The relationship between the two largest economies in the US and China will have a significant bearing on world trade and global capital markets.
In the case of the EU, its leaders are keen to rekindle their ties with the US on major issues such as climate change. Under the EU’s new budget and recovery package of €1.8t (US$2.2t), carbon cuts of at least 55% over the next decade were targeted. This ambition reflects that of organizations across the world to cut emissions and to tackle climate change.
Overall, 2021 is an opportunity to build on the “great reset” of 2020, and to put in place new ways for society and economies to thrive.
Related article
Subscribe to EY Quarterly IPO Trends reports
Get the latest IPO analysis directly to your inbox
Chapter 2
Key highlights from global IPO trends
Strong Q4 2020 IPO activity demonstrates resilience and defies expectations
Results show a prosperous end to a challenging year.
- 2020 markets recovered to pre-pandemic levels, reaching new heights.
- 2020 deal numbers rose 19% and proceeds rose 29% year-on-year.
- October 2020 was the most active October for the last 20 years by deal numbers.
Speaking on Bloomberg Daybreak: Asia on 20 January 2021, Paul Go, EY Global IPO leader, discusses the company’s latest IPO report and his outlook for the market in 2021.
To get more insight into the steps companies need to take to maximize their chances of IPO success, download our Guide to Going Public (pdf).
Subscribe to EY Quarterly IPO Trends reports
Get the latest IPO analysis directly to your inbox
Summary
The results of the latest EY Global IPO trends report find that IPO markets were more resilient than expected over the last year. The strong finish of 2020 provides good momentum for the IPO market going into 2021.
