Global IPOs shrink; US community bank earnings fall; PE fundraising dips
Today is Tuesday, August 01, 2023, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition of?Insight Weekly, we put the spotlight on the global slowdown in initial public offerings (IPOs) amid tightened monetary policies. There were 321 IPOs launched globally in the second quarter, down from 338 in the prior three months and the worst quarter for IPOs since the second quarter of 2020, according to the latest data from S&P Global Market Intelligence. The IPO slowdown is due in large part to efforts by the US Federal Reserve and other central banks to fight persistently high inflation with higher interest rates, after keeping them near zero during much of the pandemic. Investors remain risk-averse, but the large IPOs that found support included businesses with proven track records, such as those split off from large corporates, according to Market Intelligence's latest global M&A and Equity Offerings Market Report. A spinoff of Johnson & Johnson's consumer health business, Kenvue Inc., was the largest global IPO of the first half and ranked as the largest US IPO in more than a year. IPOs are likely to get a boost as central banks move toward an end of rate hikes. Many investors expect the Fed's interest rate increase on July 26 to be the last in the current hiking cycle.
The majority of US community banks recorded declines in their earnings in the second quarter amid a challenging operating environment. Of the 21 banks with $5 billion to $10 billion in total assets that announced second-quarter financial results as of July 21, 14 booked lower earnings per share quarter over quarter and 12 posted lower EPS year over year, according to a Market Intelligence analysis.
Globally, private equity funds raised $444.65 billion in the first half, down 20.5% year over year from $559.02 billion in the first half of 2022, according to Market Intelligence and Preqin data. The 489 private equity funds actively raising investor capital in the first quarter fell to just 456 funds in market as of the second quarter, the lowest quarterly total since September 2014. The first half was also marked by a steep year-over-year decline in new fund launches.
IPO Slowdown in Focus
Global IPOs in Q2 2023 hit lowest level since 2020 as interest rates soar
The rising cost of capital is dampening public market debuts.
—Read the full article from S&P Global Market Intelligence
Fed's rate hike in July set to be last for 2023; full impact yet to be felt
The Federal Reserve has now increased its benchmark rate to the highest target since 2001.
—Read the full article from S&P Global Market Intelligence
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Deep Dives
In-depth features looking at the impact of major news developments in key industries.
Financials
US banks increasing reliance on CDs as funding pressure builds
During recent earnings presentations, several banks reported significant jumps in their certificates of deposits, continuing a trend of offering higher-cost funding products.
—Read the full article from S&P Global Market Intelligence
Deposits grow for majority of banks with $100B to $1 trillion of assets in Q2'23
Net interest margin compressed quarter over quarter but expanded year over year for majority of the banks.
—Read the full article from S&P Global Market Intelligence
Rising funding costs to dampen margin growth for Southeast Asia banks
Eight of the 11 largest banks by assets in Southeast Asia will likely see their net interest margins rise in 2023, while three are expected to decline, according to analyst consensus estimates.
—Read the full article from S&P Global Market Intelligence
QOQ, YOY earnings growth proves challenging for most US community banks in Q2
Of the 21 banks with $5 billion to $10 billion in total assets that announced second-quarter financial results as of July 21, 14 booked lower earnings per share quarter over quarter and 12 posted lower EPS year over year.
—Read the full article from S&P Global Market Intelligence
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Insurance
Financials Research: Specialty commercial writers soar in US P&C insurance performance rankings
S&P Global Market Intelligence ranks the top performing US P&C groups by key measures of 2022 financial performance, with rankings of the 50-largest entities across business lines.
—Read the full article from S&P Global Market Intelligence
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Fintech
451 Research: Global fintech funding nearly halves to $23B in H1 2023
Venture capital funding for financial technology startups plunged 49% globally year over year to $23 billion in the first half. The impact was relatively severe in Europe, the Middle East and Africa, with investments dropping 75% to $4.28 billion.
—Read the full article from S&P Global Market Intelligence
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Real Estate
US REITs raise $5.71B through capital offerings in June
The majority of the capital raised in June came through senior debt offerings, at $4.80 billion
—Read the full article from S&P Global Market Intelligence
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Private Equity
Private equity's skimpy H1 fundraising haul down 20.5% year over year
Private equity fundraising in 2023 is on track for its lowest annual total since 2015.
—Read the full article from S&P Global Market Intelligence
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Credit and Markets
June's US retail sales fall short of expectations; 3 new bankruptcies
Consumer spending at retailers grew in June, though not as much as economists predicted.
—Read the full article from S&P Global Market Intelligence
Flash PMI signals further cooling of developed world economic growth in July
Declines in manufacturing activity and slowing demand for services are curbing growth in the four largest developed economies — the US, UK, eurozone and Japan, according to flash Purchasing Managers' Index data compiled by S&P Global.
—Read the full article from S&P Global Market Intelligence
CEE in focus: Shifting gears to monetary easing
With monetary policy expected to start loosening across Central and Eastern European (CEE) economies ahead of the eurozone, the implications for growth are expected to be positive.
—Read the full article from S&P Global Market Intelligence
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Energy and Utilities
Cool spring compounds interest rate, inflation pressure for US utilities in Q2
"Attention will fall squarely on management measures to mitigate these additional pressures," BMO Capital Markets analyst James Thalacker said.
—Read the full article from S&P Global Market Intelligence
European utility analysts see strong earnings, possible guidance upgrades in Q2
While many companies may see earnings decline year over year, those with merchant generation or energy trading divisions will continue to reap the benefits of power and gas prices still at levels above the long-term average, analysts said.
—Read the full article from S&P Global Market Intelligence
RRA Research: Fast-growing US, Canadian solar generation fleet soaks up excess sun in Q2 2023
Operating US and Canadian solar projects experienced a weighted average solar radiation 0.5% above the norm in the three months ended June 30, 2023, but the lower US latitudes logged subpar sunshine.
—Read the full article from S&P Global Market Intelligence
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Technology, Media and Telecommunications
Kagan Research: Consumer Survey: Many are aware of and ready to enter the metaverse
More than half of global respondents to a recent S&P Global consumer survey consider themselves somewhat or very knowledgeable of the metaverse and a strong majority have an interest in experiencing it.
—Read the full article from S&P Global Market Intelligence
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Metals and Mining
Analysts expect Q2 2023 EPS to fall QOQ for select copper miners
Copper prices trended lower in the second quarter of 2023, eroding earnings per share for select copper miners, according to an analysis based on S&P Capital IQ consensus estimates.
—Read the full article from S&P Global Market Intelligence
Metals and Mining Research: IM July 2023 – Exploration index tanks
S&P Global Market Intelligence's Pipeline Activity Index decreased 23% month over month in June.
—Read the full article from S&P Global Market Intelligence
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Supply Chain
India unlikely to fill China-shaped hole in US supply chains
India is expected to be a small but growing beneficiary as geopolitical tensions move US companies to shift their supply chains away from China.
—Read the full article from S&P Global Market Intelligence
Supply chain outlook: Right place, right time
In this episode, the head of supply chain research at S&P Global Market Intelligence shares insights from his recent outlook report for the third quarter.?
—Listen to Economics & Country Risk, an S&P Global Market Intelligence podcast.
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The Week in M&A
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Fintech M&A Deal Tracker: Building a pipeline as slowdown persists
European power, gas M&A subdued in Q2, continuing quiet 2023
Oil, gas deal tracker: M&A, asset deal values rise in Q2 YOY
Deal Tracker: Infotech sector logs 2nd-largest M&A deal year to date in June
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The Big Number
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Compiled by Roma Arora