Capital Quarter Summer 2020: Market Analysis: What’s been happening on the stock market?

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There continues to be a low numberof issues on both AIM and the Main Market.

This is reflected in the 6 months leading to 30 June 2020, with only 30 new issues compared to 43 in the same period in 2019. Similarly, there were 78 cancellations across both markets (6 months to 30 June 2019: 62). This may reflect continued delays in IPOs and financing difficulties as a result of the COVID-19 pandemic.

All is not doom and gloom however; companies seeking an IPO are still continuing preparations in the background – particularly those companies who have robust business continuation plans, and in sectors benefitting from the pandemic, such as healthcare and technologies. These IPOs may happen quickly as restrictions are eased, whereas Traditionally strong performing sectors, such as financial services may take longer to bring to market.

An interesting trend across H1 of 2020 was the significant increase in further issues across both markets compared to the same period in 2019. These accounted for 89% of the total money raised in 2020. It indicates that both retail and institutional investors continue to have confidence investing in existing listed companies and there is an availability of capital for the right companies, despite difficult trading conditions.

The sectors which have thrived on these secondary issues are media, technology and pharma – all of which have been characterised by companies able to find new opportunities in the ‘new normal.’

What is clear is that capital continues to be raised in the markets and companies planning IPOs or further raises should feel confident in coming to market.
The key to success will be being able to demonstrate how their business can adapt and thrive in the world post COVID-19.
Written by Adam Humphreys in our London office.