#United States #New York #Global Equity #Trade War #IPO Volumes

Global Equity Markets Face Headwinds in 1Q25

The latest report from Dealogic highlights troubling signs in the global equity market during the first quarter of 2025. According to their ECM Highlights report, equity volumes are witnessing a downward trend, linked significantly to the rising volatility stemming from escalating trade tensions.

Declining Volumes and Market Behavior

As we look into the figures, equity issuances hit approximately USD 160.4 billion, reflecting a 7.7% decrease when compared to the same period a year earlier and a staggering 27.9% drop from the previous quarter. The total number of deals recorded until March 24, 2025, stands at 1,269, marking a 22% decline from the 1,635 deals of 1Q24. Despite a handful of large transactions that bolstered the issuance statistics, the overall activity showcases a market increasingly hesitant to take risks.

IPO Landscape

Interestingly, while overall market conditions appear gloomy, there was a 15.9% rise in Initial Public Offerings (IPOs), accumulating to USD 27.7 billion. Most of these IPOs were priced before a significant correction in the US market which occurred in March. The largest IPO during this quarter was from Japan's JX Advanced Metals, which successfully raised around USD 2.6 billion.

However, US IPO volumes did increase by 23.8% year-on-year, with multiple offerings primarily taking place in January and early February. Nevertheless, the impact of tariffs pressing down on valuations has inflected worries on market sentiment. Upcoming IPOs, including those of Coreweave, Klarna, and Stubhub, are expected to encounter substantial scrutiny as their success will indicate the market's readiness to withstand increased volatility.

Regional Insights and Market Dynamics

In the European, Middle Eastern, and African (EMEA) region, equity capital markets witnessed a significant uptick — up 18.9% from a year prior — largely due to secondary sell-downs where European stakeholders sought to capitalize on favorable valuations. Notably, secondary sell-downs in Europe surged 38% compared to an unfortunate drop in US follow-on volumes, which plummeted by 27.8%.

Meanwhile, Asia demonstrated mixed results. Hong Kong showed an impressive revival with ECM issuing reaching USD 18.5 billion, elevating by an amazing 1,160% from 1Q24, attributed mainly to technology launches. Contrastingly, Indian market volumes dwindled to USD 6 billion, a stark 62.2% decrease from last year. Overall, the APAC region saw a slight increase of about 2.5% year-on-year.

Expert Opinions

Samuel Kerr, who heads ECM at Mergermarket, commented on the market's shift in outlook, noting that initial optimism at the year's onset has given way to a more bearish sentiment as tensions between the US and major trading nations have heightened. The current trade policies could cause a recession, affecting investor risk appetite and deal executions, particularly for IPOs that depend on stable market conditions to gain traction. He asserts,

"The only animal spirits affecting markets now are bearish, as trade hostility continues to escalate. Investor capacity for risk has diminished, but deals will still find a way to occur."

As the markets transition into the second quarter, stakeholders remain watchful, understanding that the evolving geopolitical landscape and trade dynamics will play pivotal roles in shaping the future of global equity markets.

Conclusion

The latest reports from Dealogic signify a concerning decline in global equity volumes, underscoring the persisting trade war volatility’s adverse effects. Stakeholders are urged to remain alert as the landscape evolves, with upcoming IPOs serving as critical indicators of market resilience within this precarious framework. For further insights, interested parties can access the complete report through Dealogic's official channels.