The global IPO market, which had the biggest boom in history last year, is expected to be difficult to get out of the recession next year following this year. The U.S., which led the global IPO boom last year with SPAC investment and meme culture, is falling into an endless slump, but China is expected to show a strong rebound due to the easing of COVID-19 quarantine and reopening (economic resumption).
Bloomberg reported on the 18th (local time) that the global IPO market will continue to have the longest drought since the 2008 global financial crisis. This is because the global IPO market is rarely showing signs of recovery due to inflation and high-interest rate pressure from governments to curb it. Bloomberg data showed that this year’s global IPO amounted to $207 billion, a 68% drop from the previous year. This is the biggest drop in 14 years since 2008 (73%) when the global financial crisis erupted due to the Lehman Brothers crisis.
Last year, the size of the global IPO reached a record high of 655 billion dollars as funds that lost their way due to the continued release of money by governments due to COVID-19 flocked to the stock market. In addition to traditional IPO, companies that entered the stock market through SPAC led the IPO boom, and individual investors also led the craze by enthusiastically investing in SPAC, which has high market profits.
However, as liquidity dried up after the COVID-19 pandemic, investor sentiment began to deteriorate rapidly. On top of that, the IPO market slump is deepening as stock prices of companies listed on the stock market, including SPAC, have fallen sharply. Shares of companies listed through SPAC on the U.S. stock market plunged 19% so far right after listing last year. Shares of Livian, an electric vehicle company that claimed to be Next Tesla and gained huge popularity, plunged nearly 70%.
In particular, the U.S. market, which enjoyed the largest-ever boom last year, fell the most. The amount of IPO in the U.S. stock market was only $23.9 billion this year, the lowest since 1990. Compared to last year, it is a 93% drop. Bloomberg diagnosed that the U.S. IPO market, which had enjoyed the biggest boom in history, fell into a recession as the SPAC bubble that hit the U.S. economy last year burst.
Bloomberg analyzed that expectations for the normalization of the IPO market are falling as the Federal Reserve, the U.S. central bank, dismissed the market’s pivot expectations at a regular meeting of the Federal Open Market Committee (FOMC) on the 14th, saying, “We are not considering a rate cut yet.” Gareth McCartney, global co-chairman of the UBS Stock Issuing Market (ECM), said, “It is difficult to predict a shift in growth in the global IPO market next year.”
