A selloff rattles global equity markets, knocking our IPOs out of the running
Over the course of the year, $26.7 billion worth of IPOs have priced globally, a 60% drop from the same period a year ago. Now, pulled deals are piling up as a result of market turmoil.
Slowing economic growth, geopolitical tensions, and the prospect of interest rate hikes have put global equities on course for their worst month since the pandemic started. Technology and growth stocks, including recent IPOs, have been particularly vulnerable.
The Cboe Volatility Index, a measure of expected market swings, has soared to record-high levels, as Investors struggle with their portfolios turning negative and transitioning to value stocks.
Due to falling investor demand and rocky markets, IPOs have been pulled almost twice as much as a year ago, totaling $6.2 billion. Another casualty was Hyundai Engineering Co., a $1 billion listing that was pulled on Friday.
Even though the selloff is removing some froth from the market and will likely create many growth stock opportunities for the long term, it would be brave for a company to push for an IPO in this environment," said Virginie Maisonneuve, global chief investment officer
Chi Chan, portfolio manager at Federated Hermes, said, "Overall, the market and appetite for deals will be muted compared to last year." "The question is, will the market accept the volume of deals at the prices they want?"
There is still a window for most companies to find a launch window," said Shi Qi, chief executive officer of China International Capital Corp. "As long as the valuation expectations are aligned with market conditions, there is still demand," he noted.
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