Europe IPOs Shunned as Skeptics Seek Stability: Chart of the DayInyoung Hwang
Not since the 2002 technology-bubble crash have investors been this skeptical toward European initial public offerings.
The CHART OF THE DAY shows the Bloomberg European IPO Index is trading near a 12-year low versus the Stoxx Europe 600 Index. The gauge tracking companies during their first year on the market has fallen 4.2 percent in 2014, while the broader benchmark measure has advanced 3.4 percent.
After a flurry of initial shares sales in 2014 raised $64 billion in western Europe, the most since 2007, concern that economic growth will get derailed undermined confidence in recent listings. Last month, investors were further spooked after OW Bunker A/S filed for bankruptcy just seven months after the Danish fuel provider had its IPO.
“Younger businesses that are raising capital with less strong balance sheets are out of vogue,” said Matthew Beesley, head of global equities for London-based Henderson Global Investors Ltd., which oversees more than $120 billion. “Investors have paid a premium for low-growth, yet stable companies. It’s been about owning stability over volatility.”
The IPO gauge includes stocks such as Just Eat Plc, a U.K. online food-delivery company, Italian lender FinecoBank Banca Fineco SpA and luxury skiwear maker Moncler SpA. The two biggest declines this year came from energy-related shares.
A similar index of newly listed companies in the U.S., where economists forecast growth will accelerate to 3 percent in 2015, jumped to a record in November. That month, it reached a three-year high relative to the Standard & Poor’s 500 Index.