Stock market, new IPO surge in 2024

After a couple of less than exciting years 2024 it could be again the year of IPOs. The first signals came from market rally since October last year, with the Eurostoxx rising by 24%, of which 9.8% from the beginning of 2024, and the STOXX Europe rising by 19% (7% Ytd) which has created more than one expectation around a possible growth.

A second signal instead comes from comparison between the first months of 2023 and the first months of this year: if we look at the stock market listing operations in Europe in the first months of 2023, we note that there were 21 IPOs for a total value of 4.8 billion euros. This year at the same time the number of IPOs increased by 24% reaching a value of approximately 6 billion dollars.

The reasons for the increase

As Chiara Robba, head of LDI Equity of Generali Asset Managementthis year's growth can be explained “thanks to a good performance of the markets, supported by better-than-expected macroeconomic data, by a results season that did not bring major negative surprises, and by a optimism regarding the containment of inflation which should lead Central Banks to reduce interest rates at the beginning of the summer.”

“With an economy USA that's going towards a soft landing is that European which it should recover starting from the second half of the year, and with a probable tax cuti of interest around the month of June for both the Fed and the ECB, it is possible that the positive IPO trend that we saw in the first quarter could accelerate,” Robba added.

The IPO market in 2023

The climate of macroeconomic uncertaintywith expectations of recession in the USA which were then denied by the numbers with a 2023 GDP expected to be around 2.5%, and interest rates still high in the main developed markets, had already reduced the global IPO market by 33% overall during all of 2023.

Europe and Asia they had been particularly impacted (-51% and -44% respectively according to a study by EY), while the United States had managed to increase the value of IPOs by 155% to $22.7bn (almost three times the level of $8.9bn in 2022) thanks to example to IPOs related to artificial intelligence (Arm in semiconductors).

With regard to Italyin more detail, the year 2023 saw on the Italian Stock Exchange around forty IPOs and admissionsincluding Lottomatica and Ferretti (dual listing after HK).

The Goldman Sachs Barometer

The Goldman Sachs barometer measures how favorable the macroeconomic and market context can be to IPOs. This index includes statistics such as ISM Manufacturing, CEO Confidence Level, and S&P 500 EV/Sales Index among others. According to the barometer there would be a level of 119which is above the 100 level indicating an increase in IPOs.

The data of US barometer it is also encouraging for Europeas evidence from Goldman Sachs shows that there is a positive correlation with the European one, which generally lags by about a quarter.

The ability and the market's appetite to subscribe to IPOs seems to be still high therefore, even if we look at the level of cash still available in the Funds under management. What will also be important to monitor is the trend of IPOs that we have seen since the beginning of the year.