The flow of economic stimuli and the umbrella of central banks in response to the crisis unleashed by the covid-19 pandemic have had as a response a real party in the capital markets: companies around the world have raised in just three weeks a whopping $ 400 billion, a figure more than double that of the same period last year, when economic collapse was not yet in sight.
The figure, which adds both bond and equity issues, is one of the highest in the past two decades, according to an analysis by the Financial Times with data from Refinitiv. In fact, last year, 2020, in the same period barely $ 170 billion had been raised.
This big increase causes the flow of stock trading to also increase in quantity.On a public scale, the use of trading platforms such as online trading platforms UK has also reportedly experienced a significant increase, compared to what happened last year.Certainly an indication that the global economy is unlikely to collapse, as predicted by some economists.
Specifically, the companies have raised $ 337 billion in debt markets in the year through January 22 and a record $ 64 billion through IPOs and stock offerings in the secondary market.
The clamor for fresh money in the midst of an almost unprecedented economic crisis shows how much of the markets have remained undaunted in recent months by the evolution of the global pandemic, which has once again forced restrictions in the US, Europe and even China, which will once again weigh down economic growth.
“The only thing that matters to the markets is global fiscal and monetary policy,” says John McClain, portfolio manager at Diamond Hill Capital Management, to the British newspaper. “Market prices are as if the coronavirus no longer matters.”
Among the IPOs, the record is currently held by the Israeli company Playtika, with a collection of 2,200 million dollars, although the largest share sale has been that of the Chinese company, specialized in electric vehicles, BYD, with a figure of 3.9 billion.
Dating app Bumble and online greeting card company Moonpig are among companies planning to go public soon, in New York and London respectively.The same is happening in the debt markets. Central bank policies have led companies to try to take advantage of historically low interest rates, as investors seek returns in riskier parts of the market. Global issuance of high-yield bonds – or junk bonds – during the first three weeks of January reached an all-time high during the period of $ 49.8 billion.
Meanwhile, the performance of the ICE BofA triple-C US bond index, which tracks some of the riskiest debts traded on the market, sank to 7.6 points on Friday, approaching a record low.
“Investors cannot fight against global and coordinated monetary policy. It’s almost disheartening, ”McClain laments. “The only place in the world that pays any kind of real yield is US bonds.”