The coronavirus pandemic has hit the global stock market hard, wiping off billions in stock values amid extreme volatility and massive sell-offs. Historic losses in the first three months of the year have turned into the worst quarter since 1987, even for the largest stock exchanges.
As the second-largest stock exchange market in Europe and seventh globally, the London Stock Exchange has also witnessed a considerable drop since the beginning of the year. According to data gathered by AksjeBloggen, the value of companies trading on the London Stock Exchange amounted to £3.08trn in April, an £842bn plunge compared to December figures.
Market Value Fell Over 30% in Three Years
The coronavirus pandemic followed after the slowest year for fundraising activity on the London stock market in more than a decade. At the beginning of 2017, the market value of companies listed in London amounted to £4.58trn, revealed Statista data. By the end of the same year, this figure dropped to £4.23trn. The downsizing trend followed in 2018, with the value of companies falling to £3.78trn.
The 2019 brought new concerns over a slowing global economic environment hit by and US-China trade tensions, weak eurozone growth, and prolonged Brexit uncertainty. These worrying circumstances knocked flotations and equity raising on the London Stock Exchange, ending the year with a £3.92trn market value.
The first three months of 2020 have witnessed a sharp plunge of market cap, falling from £3.83trn in January to £3trn in March. Although April has seen a slight recovery, increasing by over £80bn from the prior month, statistics indicate the value of companies listed in London plunged by more than 30% in the last three years.
Number of Companies Listed in London Continues to Fall
The Statista data also revealed the number of companies listed on the London Stock Exchange fell considerably over the years. The first significant drop happened at the beginning of 2017, with the figure decreasing from 2,262 to 2,037 between January and February.
The next year brought a recovery with over 2,160 companies in May 2018. However, a total of 28 businesses listed in London were snapped up by private equity firms in ‘public to private deals’ in 2018. By the end of the year, the number of companies decreased to 2,099.
The value of deals more than doubled last year, reaching £21.1bn in total. By December 2019, the number of companies trading on the London Stock Exchange stood at 2,055.
The downsizing trend continued in 2020, with the number of companies falling to 2,020 in April. Despite this, daily trades on the London Stock Exchange spiked in March, reaching over 2 million, a 160% jump compared to January figures.
London Stock Exchange’s Sustainable Bond Market enters its second month
This news comes as the London Stock Exchange’s sustainable bond market is gaining traction. Launched in early April, London Stock Exchange’s Sustainable Bond Market acts as a platform for sustainable finance instruments and comprises dedicated segments for social and sustainability bonds. We remain committed to supporting our clients and the development of the social and sustainability bond markets during this unprecedented period.
London Stock Exchange will be admitting social and sustainability bonds with use of proceeds aligned towards mitigating the impact of COVID-19 with no admission fees for an initial period of three months commencing 3 April 2020.
Eligibility criteria
· Applies to bonds admitted to one of London Stock Exchange’s markets
· Applies to social or sustainability bonds only that meet the eligibility criteria for the Sustainable Bond Market, and where use of proceeds are aligned towards addressing or mitigating social issues wholly or partially emanating from COVID-19 through projects related to access to essential services, healthcare, employment, water and sanitation or the relevant UN Sustainable Development Goals under the issuer’s publicly available and provided framework
· Issuers and advisors would need to request for the application of this fee waiver on the relevant Sustainable Bond Market Application and Declaration form.
“We strongly believe that social and sustainability bonds with use of proceeds aligned to funding essential services such as healthcare, water and sanitation, supporting employment, or with a link to the relevant UN Sustainable Development Goals can have a role to play in directing capital to initiatives that will help mitigate the impact of COVID-19. Such instruments could help issuers in both developed and developing countries unlock funding for a wide range of critical projects in both the short and long term,” said the institution.
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