Volatile First Half of 2025: Triumphs and Challenges in Global ECM

In the first half of 2025, the global equity capital markets (ECM) displayed notable fluctuations, largely influenced by macroeconomic shifts and geopolitical tensions. According to Dealogic's ECM Highlights report, this half-year was characterized by a sharp sensitivity to external shocks, causing both high and lows that impacted investors and firms alike.

A Strong Start Turned Dramatic Collapse

The start of 2025 was promising for the ECM, showing significant issuance and positive momentum. However, a storm brewed in April when global tariffs prompted a drastic market downturn, marking it as the most challenging month for ECM activities since October 2011. Investor confidence plummeted, and many anticipated a prolonged downturn similar to the previous decade’s recessions.

Nevertheless, May brought hope with an extraordinary recovery that saw issuance surge by 2.4 times compared to the previous month, coinciding with rallies in global equity indices. This bounce-back underscores a vital lesson in market resilience: recovery is often just a step away, even after major setbacks.

Regional Performance and Sector Trends

Americas and APAC Lead Recovery

In the first half of 2025, the total ECM issuance reached an impressive USD 381.2 billion, reflecting a 3% increase from USD 370 billion during the same timeframe in 2024. The Americas spearheaded this growth with USD 190.6 billion, while the Asia-Pacific region followed suit with USD 114.5 billion. This growth trajectory signals a robust recovery for these regions, diverging from the initial downturn that stymied many sectors.

US Growth Tech IPOs Ignite Optimism

The latter part of the first half bore witness to a revitalization of investor enthusiasm, particularly regarding technology IPOs. Companies like CoreWeave, Circle Financial, and Chime saw remarkable post-IPO performance, registering increases of 334%, 750%, and 10.2% respectively. These successes contributed to a renewed investor confidence that offset earlier declines. The palpable interest in high-growth sectors highlighted a robust appetite for businesses focused on emerging technologies, including artificial intelligence and cryptocurrency.

European Follow-Ons Win Global Attention

During this turbulent period, European markets exhibited resilience as global asset managers turned their sights towards undervalued European assets. The European, Middle Eastern, and African (EMEA) region saw a significant drive in ECM activity, primarily from follow-ons which amounted to USD 78.4 billion, driven by notable sell-downs from recognizable brands like Ferrari. However, IPO volumes subsided by 46% year-on-year, illustrating a clear pivot within investor strategies.

Asia's Revival Anchored in Hong Kong

Hong Kong emerged as a vibrant player in global ECM, with new listings skyrocketing to USD 12.8 billion in the first half of 2025, a stark increase from merely USD 1.8 billion a year earlier. This surge was propelled by strong performances from Chinese new economy enterprises, particularly post their successes in artificial intelligence during the first quarter of the year. India too showcased growth through listed follow-ons, reflecting a resurging domestic investor enthusiasm.

Looking Ahead: The Need for Agility

Samuel Kerr, Head of ECM at Mergermarket, commented on the volatile landscape, emphasizing the rapid shifts in investor sentiment that could influence the remainder of 2025. “The first half has been a rollercoaster, with tariffs creating a significant ripple effect while the subsequent recovery signals a readiness among investors and issuers to adapt swiftly to market fluctuations,” he stated.

The backdrop of heightened geopolitical volatility necessitates agility among investors and companies. The impressive IPO results and heightened interest in European blocks underscore a proactive search for global equity diversification. Moving forward, stakeholders must remain vigilant, ready to seize opportunities while navigating potential hurdles throughout the rest of the year.

In conclusion, while the first half of 2025 was fraught with challenges for the global equity capital markets, the lessons learned emphasize resilience, adaptability, and the potential for swift recovery, reinforcing the interconnectedness of today's markets.