Review of the Main Market for the six months to December 2019
Fundraises and transaction numbers declined in H2-19 to their lowest levels since the Eurozone crisis.
A surge in the indices in late December 2019 and the potential for some certainty in UK politics (at least in the short term) supports the hope for a stronger 2020.
Market Performance and Fundraises
H2-19 was a tumultuous period in UK and global politics. The uncertainty was reflected in the low level of fundraising activity across the Main Market.
The number of Main Market new admissions declined by 40% in 2019. This decline was significantly greater than the global average (19%) suggesting it was, at least in part, local political conditions which hurt the UK markets.
The FTSE 100 fell by 4% from the end of June to mid-December caused by political uncertainty in the UK. Whilst the return of a majority government indicated the deadlock was broken, and drove a late surge in activity in December, this was too late to impact fundraising activity in 2019. H2-19 had the lowest total fundraise since H1-13.
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Funds raised by sector (£'bn)
Financial services (funds) remained the most active sector, raising £2.7bn in H2-19. As investors appeared to remain risk averse, their ability to spread risk through fund investing remained an attractive option.
Technology & media was the second largest sector, raising £700m primarily through new issues. Of this, £600m was raised by Airtel Africa.
Stock market indices: H2-19
- While fundraises remained depressed throughout the period, over the course of H2-19 all indices gained in excess of 10%.
- Activity across all indices was suppressed in August and September following the announcement by Boris Johnson that parliament was to be prorogued, and the subsequent legal action. The heightened risk that parliament would be unable to reach a deal prior to the Brexit deadline on 31st October impacted confidence across all markets.
- In Autumn, following the granting of an extension to the Brexit deadline and the announcement of the general election, the performance of the FTSE 250 diverged from the FTSE 100.
- All indices increased sharply from mid December as the return of a majority government brought some certainty to the markets.
Rebased at July 2019
Monthly new and further issues transactions 2019
The impact of political uncertainty was particularly stark on further issues. Following the Brexit referendum, further issue fundraising performed relatively better than new issues. While the number of further issues remained relatively comparable, H2-19 fundraises were the lowest since the financial crisis.
There were no further issue transactions raising more than £300m in the second half of the year. The largest was £260m raised by Unite Group PLC in July.
While the number of new issues was similarly low with only 22 transactions (the lowest since H1-16), the average fundraise was broadly in line with 2018. The IPOs which were able to get away appeared to generate positive traction with investors.
After the surge in late December, the FTSE ended the year 12% higher than the equivalent time last year. This, combined with the potential for some short-term certainty following the UK’s departure from the EU in January and the pent-up demand for IPOs and fundraises, suggests that there may be a window for increased Main Market activity in 2020.
However, market performance in January has been volatile. While UK indicators remain positive, the impact of Eurozone negotiations, as well as the spread of Coronovirus, means there could be headwinds ahead.
About Main Market Insights
A six monthly report analysing the equity activity on the Main Market of the London Stock Exchange. Produced by our Capital Markets team the report considers the performance of the Main Market and its listed companies, examines market data and compares it with historic data to identify key trends.