UK beats Europe with equity market activity amid global political uncertainty

Global stock market debuts have been hampered by political uncertainty, but the UK has outpaced European rivals with a flurry of activity this year, new data has showed.

Snap elections in France and the upcoming US presidential election have heightened nervousness among investors and dealmakers.

Equity capital market activity, which includes initial public offerings (IPOs), had been picking up the pace this year but has slowed in recent months.

An IPO is when a company launches its shares on the public stock markets.

Data from Dealogic showed that global IPO and other equity market activity amounted to around 531 billion US dollars (£398 billion) over the first nine months of the year, nearly 12% higher than the same period last year.

But over the latest quarter, between July and September, deals were more than a fifth lower than between April and June.

Dealogic said this reflects a significant slowdown in what had begun as a year of recovery for global IPOs.

There has been a stronger recovery in the UK since stock markets were hit by a dearth of IPO activity coupled with a number of UK-listed firms being bought out or defecting to markets abroad.

In the UK alone, deals surged by 48% to total 26.1 billion dollars (£19.6 billion) over the first nine months of the year, compared with the same period a year ago.

However, this was driven by other types of activity such as already-listed companies issuing new shares on the public markets and investors offloading large amounts of their stock.

This made the UK a top performer in Europe, where political uncertainty led to a sharp drop in activity across the continent.

For example, volatility across European markets led Italian trainer maker Golden Goose to shelve its plans for a Milan listing earlier this year.

Dealogic said uncertainty around the snap elections in France led to dealmakers and investors holding off, resulting in the worst quarter for European IPOs since the start of 2019.

Notable IPOs in London this year include the Raspberry IPO, a budget computer firm which buoyed markets with a valuation of around £540 million.

MicroSalt, a salt producer, and Kazakhstan airline Air Astana both floated in February, while Jersey-based finance firm Rosebank Industries listed its shares in July.

Earlier this week, JD Sports-backed supplements firm Applied Nutrition said it was considering an IPO in London.

Samuel Kerr, the head of equities capital markets for Ion Analytics, which operates Dealogic, said: “The slowing in deal flow coincided with an uptick in equity market volatility in August and nerves around this year’s snap French elections alongside the upcoming US elections.

“With global interest rates now falling, there is further impetus for equity deals, but dealmakers and investors alike are keeping a close eye on the November polls.”