Americas IPO markets quiet with the US government shutdown
Americas IPO activity fell sharply in YTD 2019, with deal proceeds decreasing 83% to US$3.3b and deal numbers falling by 44% to 31 IPOs, compared to Q1 2018.
The US accounted for 65% of Americas’ IPOs (20) and 92% by proceeds (US$3.0b). However, in the US, market volatility caused foreign issuers to choose to postpone their listings. Only four cross-border IPOs listed in the US in Q1 2019, in comparison to 15 companies in Q1 2018.
The NASDAQ ranked second among the top exchange by proceeds globally in YTD 2019 (raising US$2.5b or 19.1% of global proceeds), while Canada’s Toronto Main Market and Venture Exchange saw 5 IPOs, which raised US$188m in Q1 2019, and Chile raised $69m via a real estate IPO.
My colleague Jackie Kelley, EY Americas IPO Markets Leader, summarizes these trends:
“It was a quiet quarter across the Americas, partly because of the US government shutdown, where the lion’s share of Americas IPO activity occurs, and partly as a result of different geopolitical uncertainties affecting other markets. However, as the dust begins to settle following a quarter of uncertainties, we expect IPO activity to return to more normal levels in Q2 2019.”
Asia-Pacific IPO market sentiment impacted by the trade tensions
A lull in IPO activity also spread across the Asia-Pacific region in Q1 2019 as global economic uncertainty and geopolitical issues prevailed. Ongoing trade tensions between China and the US weighing heavily on market sentiment and the region saw a decline of 24% by deal numbers (126) and 30% by proceeds (US$8.4b) versus Q1 2018.
However, Asia-Pacific continued to dominate global IPO activity in Q1 2019, with 63% of global IPOs and 64% by proceeds. This region accounted for eight of the top 10 exchanges globally by deal number and six exchanges by proceeds. The Hong Kong Stock Exchange ranked first by both volume and proceeds respectively, among the top 10 global exchanges.
Mainland China saw 30 IPOs raising US$3.7b in Q1 2019. Although these numbers are lower when compared to Q1 2018, they are notably up from Q4 2018, suggesting the Mainland China IPO market may be showing signs of a recovery.
Japan continued to demonstrate strength in its IPO markets with Q1 2019 numbers exceeding that of Q1 2018 (23 IPOs in Q1 2019 versus 18 IPOs in Q1 2018). Further, Japan’s exchanges (Tokyo, MOTHERS and JASDAQ) ranked number two among the top 10 exchanges by volume.
Ringo Choi, EY Asia-Pacific IPO Leader, says:
“Ongoing trade issues between the US and China continue to have an effect on IPO market sentiment across Asia-Pacific. But with exchanges across the region recovering from equity market corrections in Q4 2018, there are signs of a recovery in IPO activity ahead. Post-IPO performance levels is another key factor to watch in determining the recovery speed of IPO activity levels in 2019.”