As businesses wait out the impacts of erratic stock markets, higher interest rates and inflation, and uncertainty surrounding the banking crisis, a slowdown in international initial public offerings persisted in the first quarter of 2023 and is likely to persist in the following months.
According to a report released by EY on Thursday, 299 companies around the globe went public in the last three months, which is an 8% decrease from the same period last year. In contrast, the amount of money collected from those listings fell 61% year over year to $21.5 billion.
The decline of Global IPO
According to EY, there was a 45% decrease in IPOs last year, which led to the current downturn. The stuttering worldwide IPO market continued to experience the same problems through just one quarter of 2023, the company said in a statement on Thursday.
Any initial euphoria at the beginning of the year was soon dampened by the unexpected inflation and interest rate outlook, and the newest turmoil in the global banking system only served to dampen the mood further.
- The amount of money collected from the listings fell 61% year over year to $21.5 billion.
- The newest turmoil in the global banking system only served to dampen the mood further.
- Choi anticipated a recovery in the global economy in the second half of 2023.
For months, investors have struggled with rising interest rates and living expenses. Recent historic upheaval in the financial sector has caused Credit Suisse, Silicon Valley Bank, Signature Bank, and First Republic Bank to need emergency interventions, which has unnerved them as well.
Choi stated that he anticipates the drop to last at least through the summer. However, as “peaking inflation, energy prices softening, and the rebound of mainland China’s economy” help investors regain trust, things may turn around later this year.
Choi anticipated a recovery in the global economy in the second half of 2023, in part because he thought the market had already reached its low.
The government of every country is trying to promote IPOs in their jurisdiction, which may result in a revival of IPO activity. For instance, John Lee, the chief executive of Hong Kong, recently visited Saudi Arabia and encouraged businesses to think about listing in the city, Choi said.
Investor confidence should return once there is proof of a more stable market with greater certainty, according to EY’s statement. IPO plans may be revived by reputable companies that delayed them.