Market volatility pummels equity deals to lowest in seven years: data

Thu Mar 31, 2016 7:04pm EDT
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By Freya Berry and Elzio Barreto

LONDON/HONG KONG (Reuters) - Worldwide share issues slumped to a seven-year low in the first quarter of the year, as market volatility claimed the hopes of companies seeking to list their stock, Thomson Reuters data showed on Friday.

The value of total share sales, including secondary issues as well as flotations, more than halved to $106.6 billion, the lowest since the immediate aftermath of the global financial crisis at the beginning of 2009, the data showed.

Markets have been roiled by fears of slow economic growth globally and the CBOE Market Volatility Index remained stubbornly above 20 for much of this year, the level seen as safe for stock market hopefuls to attract investors.

That turbulence made it difficult for many would-be market debutants to persuade investors of the value of their shares. Money raised via flotations or initial public offerings (IPOs) slid by almost 70 percent to $12.1 billion.

"With the VIX above 20, price discovery is challenging," said Gareth McCartney, head of EMEA equity syndicate at UBS. "For much of the first quarter, as one investor put it, 'what's not to worry about?'."

In turn, banks had a thin quarter for equity capital market (ECM) fees from advising on the sale of shares. JP Morgan (JPM.N: Quote) led global ECM fee rankings, collecting $215.4 million, down more than two-fifths on last year, followed by Morgan Stanley (MS.N: Quote) and BofA Merrill Lynch (BAC.N: Quote).

The biggest riser was Haitong Securities 600837.SS, which leapfrogged to number 10 from 48 having worked on the largest IPO of the year, that of China Zheshang Bank (2016.HK: Quote), which raised HK$13 billion ($1.7 billion). That transaction helped Hong Kong become the world's most active stock exchange for deals, followed by London and Tokyo.

For the first time since 2008, the New York Stock Exchange saw no IPOs at all. That meant the United States crashed down the rankings, with the amount raised plunging 92 percent on last year to leave it with a market share of only 3 percent against 14 percent.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) March 16, 2016. REUTERS/Brendan McDermid