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Global IPO market had its strongest second quarter in 20 years

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The New York Stock Exchange welcomes FREYR Battery (NYSE: FREY), on July 8, 2021, in celebration of its Listing.

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Global IPO activity had its hottest second quarter for 20 years by volumes and proceeds, with momentum set to continue for the remainder of the year, according to a new report from EY.

Amid strong global stock market momentum and ample liquidity, traditional IPOs came back to the fore in the second quarter after the first was dominated by SPACs, the British professional services giant found.

Throughout the first half of 2021, there were 1,070 IPOs raising a total of $222 billion in proceeds, respective annual increases of 150% and 215%.

“IPO-bound companies wanting to take advantage of favorable market sentiment and high liquidity were keen to complete their transactions before an expected mid-year slow-down,” Paul Go, global IPO leader at EY, said in the report.

“Companies considering an IPO should prepare multi-pronged strategies that demonstrate resilience against geopolitics, the evolving COVID-19 pandemic situation, valuations and governance challenges.”

SPACs have been a hot topic over the past year, but U.S. SPAC IPO activity tailed off in the second quarter as Europe took the reins, with 21 SPAC IPOs through the first half of the year.

There were 276 total IPOs across the Americas in the first half, raising $93.9 billion, while Asia-Pacific saw 471 IPOs for total proceeds of $74.3 billion.

The EMEIA (Europe, the Middle East, India and Africa) region was the fastest-growing in terms of IPO activity year-on-year, fueled by a strong bull run in equity markets. There were 323 IPOs in EMEIA through the first half, raising $53.8 billion.

“A spectacular bull run in equities markets in H1 2021 led to quadruple the number of IPOs and five times the proceeds year-on-year, we are beginning to see a return to normal in terms of IPO activity,” said EY EMEIA IPO leader Martin Steinbach.

“This is backed by positive momentum and investor sentiment, high liquidity in the markets looking for returns and an improved economic outlook. Moreover, a merger with a SPAC is becoming an alternative path for IPO-bound companies to go public.”

The U.K. also saw a sharp rise in volumes and proceeds due to pent-up demand from the past 18 months as the country navigated elections, Brexit and the Covid-19 pandemic, EY analysts said. This resulted in 43 IPOs raising $12.7 billion, a 975% and 385% respective year-on-year jump.

IPO market outlook

Tech accounted for 27% of all global IPOs in the first half of the year, and marked a fourth successive quarter in which the sector has amassed the highest number of listings, with 284 deals raising $90.2 billion. Health care notched 187 deals raising $33.4 billion and industrials saw 140 IPOs raise $24.3 billion.

EY analysts expect the IPO market to maintain its strong momentum in the second half amid favorable market conditions, but said there are still lingering uncertainties.

“A steady pipeline of $1 billion + IPOs is expected through the year including tech unicorns, SPACs and companies in sectors that have already proved resilient like technology and health care despite the COVID-19 pandemic,” the report said.

“On the flip side, 2H 2021 may prove challenging as the lingering impacts of the Covid-19 pandemic continues to affect companies in sectors most impacted by national lockdowns – such as traditional retail, travel, tourism and hospitality. If these sectors fail to recover, global markets will continue to fall short of a full global economic recovery.”

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Airbnb doubles number of Afghan refugees it plans to house

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Airbnb CEO Brian Chesky attends the Cannes Lions on June 20, 2016, in Cannes, France.

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Airbnb announced Thursday that it is planning to provide temporary housing to an additional 20,000 Afghan refugees, bringing the total number up to 40,000.

Last month, the home-sharing platform’s charitable arm pledged to accommodate 20,000 refugees. However, in a new blogpost, Airbnb said it will have “the capacity to go above and beyond” the initial commitment.

“If demand for housing aligns with supply in communities where refugees are resettling, these new resources could help provide housing for an additional 20,000 Afghan refugees,” the company said.

The company said the refugee stays are being funded by contributions to Airbnb.org from Airbnb and Airbnb CEO and co-founder Brian Chesky, as well as donors to the Airbnb.org Refugee Fund.

Airbnb has not specified exactly how much the company plans to spend on the commitment or how long refugees are being housed for.

In addition to stays funded by Airbnb.org, the company said 5,000 hosts have offered to provide free and discounted stays to Afghan refugees so far.

Companies of all shapes and sizes rush to show their support to victims in times of a major crisis; it’s an opportunity to be charitable and boost public relations in the process.

Verizon, Walmart and Texas Medical Technology are among those who have offered to help the 100,000 plus people to have fled the country to the U.S. after Kabul fell to the Taliban on Aug. 15.

Elsewhere, Amazon said it will offer jobs to refugees in the company’s warehouses and transportation hubs, as well as in tech and corporate roles.

Airbnb, which is valued at around $107 billion, often offers to cover the cost of housing in emergencies. It says that 75,000 people have found a place to stay in a time of crisis since 2012.

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Bank of England holds rates and downgrades growth projections

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General view of The Royal Exchange, Bank of England and City of London on an overcast day.

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LONDON — The Bank of England on Thursday kept monetary policy unchanged and downgraded economic growth projections for the third quarter of this year.

Policymakers at the BOE voted unanimously to leave its main interest rate unchanged at a record low of 0.1% and opted to stick to its asset purchase target of £875 billion ($1.2 trillion).

But the case for policy tightening appeared to gain some momentum on Thursday, as Deputy Governor Dave Ramsden joined Michael Saunders in voting for an early end to the BOE’s program of government bond purchases.

The central bank revised down expectations for third-quarter U.K. GDP growth to 2.1%, down from 2.9% at the time of the August report. This downgrade was said to reflect, in part, “the emergence of some supply constraints on output.”

The updated forecast would leave third-quarter GDP around 2.5% below the U.K.’s pre-Covid peak.

It comes shortly after the U.K.’s economic growth slowed unexpectedly in July and consumer price inflation saw its largest month-on-month increase since records began in Jan. 1997.

The inflation reading prompted some BOE watchers to bring forward rate hike expectations to early next year, while economists at Bank of America believe the central bank could be pressured into a rate rise as soon as February if inflation pressure persists.

Sterling traded up 0.5% at $1.3694 shortly after the central bank’s rate decision, paring losses from earlier in the week.

Economic recovery ‘leveling off’

The U.K. economy expanded by just 0.1% in July from a month earlier, according to data from the Office of National Statistics. It was the sixth consecutive month of growth amid the removal of Covid-19 restrictions, but the increase was significantly lower than expected and much slower than the previous month, which saw a 1% rise.

The ONS said the U.K. economy remains 2.1% below its pre-Covid pandemic level.

The figures prompted BOE Governor Andrew Bailey to suggest Britain was seeing “some leveling off” of the economic recovery from the coronavirus pandemic.

Speaking to lawmakers earlier this month, Bailey reaffirmed his view that a recent jump in inflation would not prove to be persistent. The BOE warned in August that inflation could hit 4% this year, double its target level, before falling back to close to 2%.

The U.K.’s consumer prices index surged by 3.2% in the 12 months to August, according to data compiled by the ONS last week. A Reuters poll had predicted a reading of 2.9% for August.

The index jumped 2.0% in July on an annual basis.

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Norway becomes the first central bank to hike rates post-Covid

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Norway’s central bank, also known as Norges Bank, in Oslo, Norway.

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The Norges Bank on Thursday become the first major Western central bank to raise interest rates following the onset of the coronavirus pandemic.

After cutting rates three times in 2020 due the economic fallout from the crisis, Norway’s central bank unanimously decided to raise rates to 0.25% from zero.

“A normalising economy now suggests that it is appropriate to begin a gradual normalisation of the policy rate,” said Governor Oystein Olsen in a statement Thursday.

The bank said that another hike is likely in December.

Norway’s currency rallied to its highest levels since June against the euro, and gained 0.7% against the U.S. dollar.

The rate hike comes as many central banks consider similar moves amid solid growth and surging inflation. In the United States, Federal Reserve officials reiterated Wednesday that a tapering of bond buying is coming “soon.” The European Central Bank recently slowed its bond buying, but an actual rate move is expected to be still some way off for both banks.

“The reopening of society has led to a marked upswing in the Norwegian economy, and activity is now higher than its pre-pandemic level. Unemployment has fallen further, and capacity utilisation appears to be close to a normal level,” the bank added in the statement.

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