Dalal Street Investment Journal - July 09, 2019

DSIJ.in JULY 8 - 21, 2019 I DALAL STREET INVESTMENT JOURNAL (^59)
Most active sectors around the world
Summary of the top three sectors by number of IPOs, by region^1 and sub-region^1 for Q1 2019 ()
Stock exchange
regions
TechnologyHealth care Industrials Consumer
products
Materials Real estate Consumer
staples
Media and
entertainment
Financials Energy Retail Telecommunications
Americas   

• US   

Asia-Pacific   

• Greater China^2    


• Japan   

EMEIA   

• Europe   


• UK^3  

Global   

Q1 2019

IPO activity^453224181712121210881

In the US markets, investors are awarding a

high multiple to the stock market this year, so

IPO investors are benefiting but the same

phenomenon is not seen in the Indian market.

Conclusion

The Indian IPO market is taking a hit due to the liquidity issue

facing the equity markets. The liquidity crisis, along with

slowing economic growth, is impacting the Indian equities

negatively and is seen eroding the premium that Indian

markets have always enjoyed within the emerging market

space. The same fundamental issues are seen impacting the

primary market in India. The first half of 2019 was marred by a

major event such as the general elections. Now, with the major

event of elections behind us and with expectations of

expansionary Union budget, the second half of 2019 is expected

to be much more promising. The average listing gains for the

IPOs launched in 2019 is something that may boost investor

sentiments. Also, with RBI expected to ease liquidity

restrictions and the government expected to adopt an

expansionary policy, it will lead to higher expenditure and

growth. The revival in earnings is also on the cards, which may

encourage more companies to tap the IPO market to raise

capital. Expect more action in IPO market in the second half,

considering the favourable election outcome and a conducive

global equity market momentum owing to easing of trade war

tensions. The US markets are already seeing a pick-up in

momentum in the April to June quarter. Indian markets will

follow suit in the remaining part of the year.

Source : EY IPO Report

Global IPO performance

If we take a look at the global IPOs, the trend is more or less similar to that of the Indian markets. The global IPO activity has been

extremely slow in the first half of 2019, even though the Q2CY2019 has been much better than the Q1CY2019. In fact, Q2CY2019

has been excellent for the US markets. In the second quarter, 62 IPOs managed to raise $25 billion, which is the highest capital

raised in five years. What is interesting to know is that the average return for these IPOs have been 30 per cent for these IPOs.

Technology was the most active sector, not only in Americas but worldwide.

DS