Stock market year 2021: Run on the floor

As of: 12/29/2021 10:01 a.m.

In the end of the year, so many companies dared to go public as they had not for a long time – in Germany, but also abroad. There are two main reasons for this.

By Klaus-Rainer Jackisch, hr

It was probably the most spectacular IPO of the year, the floor had not been so full for months: Daimler’s truck and bus division split off – Daimler Truck was listed as an independent company on the Frankfurt Stock Exchange in December. A historic day for the automobile manufacturer and good business for many investors. 31 German companies took to the stage this year – the highest level since 2007; including the Berlin online used car dealer Auto1, the radio tower operator Vantage Towers and the Linux software company Suse.

Klaus-Rainer Jackisch

Corporations have to finance transformation

The champagne corks popped around the world as well: In the year that is drawing to a close, there were more IPOs than in 20 years, the management consultancy EY calculated. Despite the coronavirus pandemic, almost 2,400 companies dared to take the share market. That was almost 65 percent more than in the previous year. The global issuance volume climbed by around two thirds to over 450 billion US dollars.

Martin Steinbach, Head of the IPO and Listings Division at EY, explains this with the financing requirements that arise from new requirements such as climate change: “We can see that the pandemic is fueling these two trends. And that means that these companies in particular and business models have grown in popularity with investors. “

A lot of money in circulation

In addition, there is the favorable market environment with predominantly rising prices and an extremely large amount of money that is available and needs to be invested. Accordingly, the investors took hold of it – and accordingly the number of newcomers to the stock exchange from the areas of high-tech, digitization and pharmaceuticals is particularly high.

The European stock exchanges recorded the strongest growth: With 485 so-called IPOs, there were more than twice as many as in the previous year. Most in one country were again recorded in China with nearly 600. But with all this euphoria, the first warning lights also come on – because going to the floor doesn’t always turn out to be a success.

“Of course, not all companies will be able to meet the high expectations that are partly aroused and announced during the IPO,” says Joachim Schallmeyer, market strategist at DekaBank. “We can see that companies with very high ratings are now also going public. And these advance praise will actually have to be fulfilled in the next few years with hard company figures.”

Will the IPO boom continue?

Nevertheless, the boom could continue next year. EY already has up to 23 IPOs on the list for Germany alone. However, the framework conditions are likely to deteriorate somewhat – on the one hand, because the central banks will tighten their monetary policy. “Secondly, we also have the tendency that increasingly Chinese companies, which are often listed on the US stock exchanges or have celebrated their stock exchange debut there, that it is becoming increasingly difficult, that major IPOs are also canceled there,” said DekaBank analyst Schallmeyer. These geopolitical tensions could also slow down the momentum somewhat. Nevertheless, the IPO bell should ring quite often in the coming year.

2021: the year of the IPO

Klaus-Rainer Jackisch, ARD Frankfurt, December 28, 2021 4:19 p.m.

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