Main Market Insights
Our Capital Markets team have produced a six monthly survey analysing the equity activity on the Main Market of the London Stock Exchange. The report considers the performance of the Main Market and its listed companies.
The ongoing delay to ‘Brexit Day’ created a short surge in activity, but ultimately did little to reinvigorate the cautious capital markets in H119.
Markets recovered in March and April which drove a surge in transaction activity; a mixture of pent up demand, and listed plc’s opportunistically tapping into the secondary market while share prices were recovering.
Main market fundraising was dominated by two fundraises in excess of £1bn, both from international ‘mega deals’, whose revenues primarily stem from overseas – no doubt benefitting from a weakening Sterling.
May and June were quiet months across the UK capital markets as the UK reacted to a cocktail of worsening global outlook data, US trade wars, Theresa May stepping down, and an increased likelihood of a no deal Brexit. Indices were only held flat by a weakening Sterling.
Investment activity has been selective and subdued. Outside of the aforementioned mega deals, H119 performance was in line with H218, which had been hit by Brexit uncertainty.
Investors remain cautious about IPOs and new issues, which were at their lowest six-monthly levels since 2016.
Outlook for H219
- Global market uncertainty, trade wars, an inversed US bond yield curve and a UK market seemingly heading towards a no deal Brexit post 30 June (with inevitable impacts on currency markets) are clearly exacerbating uncertainty in the capital markets.
- While we are aware of a number of companies still considering IPOs and fund raises in 2019, but with a view to the October Brexit deadline day, companies, investors and sponsors are being cautious and selective. Many are simply waiting until 2020, to see how Brexit negotiations pan out.
- Our market intelligence therefore suggests pent up demand for IPOs in particular, and so we hope for a resurgence once the UK markets have some certainty.
- A no deal Brexit is also expected to bring with it a weaker pound, which could also create investment opportunities for international businesses and overseas investors.
- While this uncertainty exists, it is more crucial than ever for companies to be well-prepared for IPO with a well-thought out funding strategy and a clear proposition for investors.
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