A deep dive into equity capital market performance in 2020

  • All key benchmark indices witnessed a bloodbath in early 2020, but rebounded dramatically. The S&P 500 traded at an all-time high during the year
  • Global financial markets have recovered much faster than they did after previous financial crises
  • Volatility reached its highest levels during the year and has now dropped to comfortable levels due to strong policies and positive investor sentiment
  • IPO markets had their strongest year in over a decade, despite fintech giant Ant Group’s IPO — the largest in the world — being suspended
  • This year should be much better for equity investors. FactSet estimates that the S&P 500’s earnings will increase to c.USD165 per share in 2021, a significant increase of c.22% from c.USD136 per share last year. The forecast implies that 2021 earnings will exceed the 2019 level of c.160 per share as well. However, market valuation remains extremely high compared to previous years: the S&P 500 traded at a P/E of 27.5x in 2020 and is trading at a P/E of 22.6x in 2021.
  • Against all the odds, 2020 was a historic year for IPOs. Despite strong buoyancy in 2H 2020, many companies deferred their equity raising due to significant volatility and are likely to return in 2021. The mega IPO trend should continue this year, led by technology, healthcare and SPAC IPOs. Companies such as Coinbase (cryptocurrency exchange), Bumble (dating app), Instacart (grocery delivery app) and Roblox (online gaming platform) are scheduled to raise money this year.

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Acuity Knowledge Partners

Acuity Knowledge Partners

We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/