Companies: Stock Exchange debuts disappeared from Zurich

ECONOMIA

After a weak first half of the year, the IPO (initial public offering, ie company debuts on price lists) market is booming. The June-September period was the strongest third quarter of the last 20 years, with 447 IPOs worldwide (+ 78% in the annual comparison) and a total volume of issues of 95 billion dollars (+ 138%), according to a study by EY.

Companies: Stock Exchange debuts disappeared from Zurich
Companies: Stock Exchange debuts disappeared from Zurich © Keystone

Companies: Stock Exchange debuts disappeared from Zurich

Companies: Stock Exchange debuts disappeared from Zurich © Keystone

Despite the stock market rally after the collapse of March, 2020 has been a year without new entries on the lists

In Switzerland and in Europe, however, the trend is exactly the opposite, so much so that so far 2020 has turned out to be the weakest year since 2012. Without counting the spin-offs, in Switzerland there has not even been a company that has dared the big step, and, after the resignation announced in recent days by the Epic Suisse real estate group, the agenda until the end of the year remains empty at the moment.

The role of the virus

It takes about six months to prepare for a stock market debut and the third quarter is usually a quiet time due to the summer break.

However, with the closures slowing business, several operations scheduled for the first half of the year had been postponed. The easing of health protection measures and the ample liquidity available then pushed US equity markets to record highs, a factor in favour of stock market debuts. In fact, an increasing number of companies have ventured into the bargaining arena.

The boom was recorded above all in the technology and medical sectors, particularly sought after by investors. Not surprisingly, the largest IPO in the world in the third quarter was that of Chinese chip maker Semiconductor Manufacturing International, which raised $ 7.5 billion. In second place, the US software specialist Snowflake raised $ 3.9 billion. Six German companies went public between June and September: Siemens Energy, the Hensoldt armaments group, the caravan manufacturer Knaus Tabbert and the technology investor Brockhaus Capital Management went public in Frankfurt. Tübingen-based vaccine company Curevac chose Nasdaq, the leading American technology list, while display manufacturer VIA optronics chose the New York Stock Exchange.

The difficulties for Switzerland

‘The low and negative rates have also pushed IPOs, which make liquidity expensive for large investors - explains Alexandre Tavazzi, Pictet Wealth Management global strategist -. On the other hand, it is difficult to explain why all this calm in Switzerland. In fact, the recovery of the stock exchanges was driven by defensive rather than cyclical sectors, and Switzerland is a defensive market. On the other hand, with the pandemic and home stay constraints, the big winners of the stock market were almost exclusively the tech stocks. Investors’ appetite in this area is enormous. But with us, manufacturing companies prevail over those focused on technology and software ».

Possible end of year rally

According to EY expert Martin Steinbach it is possible that there is a year-end rally in IPOs around the world, supported by the momentum of the third quarter, high market liquidity and high valuation levels. On the other hand, there is no lack of headwinds, such as the risks associated with the second wave of infections and those deriving from trade wars. ‘There is also the unknown factor of the American elections - explains Tavazzi -: the rebound in March was particular because so far the stocks that have shown themselves more resilient during the collapse have risen more. There was also no rotation towards the cyclicals as usually happens. The outlook for the stock market trend for the next few months depends a lot on the US elections: the push would probably be greater and the rotation in favor of the cyclicals would be stronger if Biden wins. The Democrats have indeed announced a $ 2.2 trillion fiscal stimulus plan, while that of the Republicans is less, at 1.6 billion. But precisely, before knowing the winner and his actual plans, it is too early to make a decision’, he concludes.

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