By Freya Berry and Elzio Barreto
LONDON/HONG KONG (Reuters) - Global equity capital markets activity has sunk to a four-year low in 2016 according to quarterly ThomsonReuters data, although bankers and investors said that while Brexit could dent volumes it would not sink the market.
The value of worldwide equity capital markets (ECM) activity has almost halved so far this year compared with the same period in 2015 as geopolitical uncertainty, the prospect of a U.S. rate rise and global growth concerns bite.
Levels were down 46.5 percent at $280.8 billion (£208.7 billion), according to quarterly data from Thomson Reuters.
Money raised by European initial public offerings (IPOs) sank 56 percent to $16.2 billion, as the shadow of Brexit darkened prospects for deals on the London Stock Exchange (L:LSE), traditionally Europe's busiest. London IPOs raised almost 60 percent less than the same period in 2015.
But amid the turmoil some saw opportunities. Investors privately told Reuters that they hoped a short-term depression in UK stock prices would help them snap up company stakes on the cheap.
And bankers said they were revisiting client lists to work out who might need equity capital in the months and years ahead.
"What might clients need if volatility continues? That's the question," said Achintya Mangla, head of equity capital markets (ECM) for EMEA at JPMorgan (N:JPM).
"It's back to basics. We're making sure we know what clients need now and for the coming weeks, and are advising them on a daily basis about the right course of action."
JPMorgan (N:JPM) rose to pole position in the global ECM league tables, followed by Morgan Stanley (N:MS) and Goldman Sachs (N:GS).
Bankers said they remained optimistic that the market would be resilient enough for listings following the traditionally quiet summer period, albeit perhaps at lower volumes and pricing.
"The IPO market is going to be open, but maybe not quite as active as before," said Craig Coben, co-head of global ECM at BofA Merrill Lynch (N:BAC).
"Investors will subject IPOs to strict scrutiny before buying, but I don't think there will be a buyers' strike."
BREXIT JITTERS
Stock market listings have had a reasonably successful quarter. Major European companies including Danish utility DONG Energy (CO:DENERG) - the biggest IPO of the year so far - and Philips Lighting
That said, some admitted that they were having to soothe the concerns of jittery teams and clients.
Stephen Lloyd, partner at law firm Allen & Overy, said some 1,750 clients worldwide joined a call examining the implications of Brexit after the result on Friday.
Others questioned whether the LSE, currently battling to get regulatory clearance for a merger with Germany's Deutsche Boerse (DE:DB1Gn), would be able to maintain its European dominance in a post-Brexit world.
"In the short term people don't like to come to market during periods of any volatility or uncertainty," Brian Schwieger, head of equities at the LSE, told Reuters on the sidelines of a conference in Hong Kong on Wednesday.
"It's critical that we get that agreement in terms of what the relationship is going to look like between the UK and EU right."
Martin Steinbach, head of IPO and listing services for Europe, the Middle East, India and Africa, expected a "stop-and-start" market with clients choosing listing locations carefully.
"The strategic question on where to list is becoming very important," he said. "Stock exchanges have to ask themselves, in a globalised market, what is their USP?"
ASIAN WEAKNESS
Share offerings in Asia Pacific ex-Japan sank nearly 60 percent in the first half of 2016. ECM proceeds tumbled to $66.6 billion, according to preliminary Thomson Reuters data through June 27. That was the weakest activity since the first half of 2008.
"The stars have absolutely aligned in an odd way against basic global or international issuance," said Aaron Arth, head of ECM for Asia ex-Japan at Goldman Sachs.
"Investors have not been active in the market and that’s representative of the performance you’ve seen."
Despite the gloomy first half and expected volatility in the next few months, some large offerings from companies in the financial services sector, including banks and brokerages should boost activity in the region, analysts and bankers said.
And a cautious optimism was seen across the market.
"After summer the traditional IPO season from September on will continue," said Bidhi Bhoma, director of corporate finance at Shore Capital in London.
"I fundamentally don't believe that short term we’ll be hugely affected."
(Addtional reporting by Michelle Price in Hong Kong; Editing by Greg Mahlich)