27 Jul 2018

Equity Primary Markets and Trading Report Q2 2018

This report provides an update on the performance of the equity market in Europe in areas such as primary issuance, Mergers and Acquisitions (M&A), trading, and valuations.

Key highlights:

  • Equity underwriting (IPOs, follow-ons and convertibles) on European exchanges accumulated a total of €78.8 bn in proceeds in the first half of 2018, a 39% decrease from the value originated in 1H17 (€129.0 bn).

    Notwithstanding the year-to-date decline, IPO issuance in 1H18 increased by 19% against the amount issued in the first half of 2017.

  • Completed Mergers and Acquisitions (M&A) of European companies totalled €496.0 bn in 1H18, a decrease of 1% from 1H17 (€ 499.3 bn). This included large megadeals such as Bayer-Monsanto, which represented 12% of the total deal value (€59.1bn).

    The amount of announced M&A deals totalled €674.1 bn, a 45% increase from 1H17. This includes large megadeals such as Takeda Pharmaceutical -Shire plc (€65bn) and Walt Disney-Sky (€30bn).

  • Equity trading activity on European main markets and MTFs generated a total of €6.2 tn in turnover value in 1H18, an increase of 4% from 1H17 (€6.0tn)

  • MiFID II dark trading caps: On 7 March 2018, ESMA published the double volume cap (DVC) data files specifying the securities that surpassed the MiFID II limits of dark trading on EU venues. The files are updated on a monthly basis based on trading activity on EU venues for all equity-like instruments in the EU during a 12-month rolling period

    - From a Universe of 23,105 equity-like securities traded in the EU, 1,024 are currently suspended (as of July 2018) from dark trading either on specific EU venues (69 securities) or on all EU venues (955) after surpassing the MiFID II dark trading thresholds (4% of the total activity on a single dark venue, or 8% of total trading market-wide for suspension at EU level). 

    - The number of banned instruments has increased during the year from 755 in March 2018)

    - The total of 1,024 instruments suspended from dark trading at the EU or trading venue level represents 4% of the Universe of equity-like instruments on ESMA’s DVC files (23,105)

    -The proportion of dark trading as a percentage of total turnover sharply decreased after the introduction of the MiFID II dark trading caps (from c9.5% of order book transactions in Oct-17 to below 4.5% in Jun-18).

  • Domestic market capitalisation of European listed shares stood at € 13.3 tn at the end of 1H18, a decrease of 0.2% from the market value at the end of 4Q17 (€13.4 tn)

Annual variation of European Equity activity (EU28 member countries and Switzerland): 1H18 vs 1H17