Boris celebrates landslide win as ECM issuance receives a boost

The global capital markets last Friday showed some relief
following Prime
Minister Boris Johnson’s landslide win in the just concluded premiership
elections. Fund managers are now setting the ground for a busy year ahead as
well as several solid UK listings.

Among the anticipated listings next year is a state block trade of
Royal Bank of Scotland.

A top ECM banker at a large US bank in London said: “I
think this is in line with what markets wanted and a majority removes any
uncertainty. People can now assume that Brexit gets done, which is good and we
can now all move forward,” adding that “no one wanted more uncertainty
or a hung Parliament — this is a great result.”

UK benchmarks including the FTSE 100 index and the FTSE 250 gained
5% and 4.3% respectively.

UK companies performed best in the markets as Taylor Wimpey,
Berkeley Group and Barratt Development jumped 15%, 12.3% and 12% respectively.

After the 80% massive win by the Conservancy party, the Brexit is
set now to proceed.

“We are going over all of the UK homebuilders this morning, as
well as challenger banks and other property companies. We have been underweighting
these names for quite a considerable time, but know them well and have been
waiting for an event to come back in,” an ECM investor said in
London.

Due to a steep decline in UK domestic IPO issuance, the ECM
listings have dropped 23.3% to date. However, ECM investors are now hopeful
that confidence in UK listings is being restored and they expect 2020 to take a
different turn from what has been experienced this year.

“People have continued to back primary equity issuance
financing M&A, right through the last year of non-performance in UK
ECM, and that will continue to work next year. Block trades have been
easier than IPOs throughout the year as well. That will continue to work on the
right day. The big change is that now there is strong potential for someone to
bring a big UK IPO,” said the ECM investor.

While the UK ECM origination bankers remain optimistic after last
week’s election, they warn that meaningful positive effects could be felt in
the long term.

“I am not sure you will meet any
investment banker, particularly an ECM banker, who likes uncertainty,” the chair
of UK ECM origination said, adding that away from politics, a common front is what’s
best for the UK.