At the beginning of this year, Nasdaq introduced the Nasdaq IPO Pulse, a premier index tracking U.S. initial public offering (IPO) activity. As noted in the previous update, the Nasdaq IPO Pulse had surged to a nearly three-year high, reflecting an increase in IPO activity through the year-end.
The IPO Pulse leverages the cyclical nature of IPO activities, which is also observable in other well-developed IPO markets. Consequently, the IPO Pulse framework can be adapted for these markets, prompting the introduction of the new Nasdaq Stockholm IPO Pulse.
### Nasdaq Stockholm Distinguished by High Retail and IPO Activity
Stockholm was chosen as the first expansion location for the IPO Pulse due to its status as a leading European marketplace with one of the deepest capital markets on the continent. Sweden and the broader Nordic region have more active markets compared to other significant European economies, largely because of substantial retail participation.
In the Nordics, approximately one-third of household financial assets are directly invested in equities, which is nearly equivalent to the U.S. share and significantly higher than both the Eurozone and the U.K. Additionally, investments via pensions and mutual funds comprise another 30% of Nordic household financial assets, comparable to the U.S. and substantially higher than the Eurozone.
This robust local investor base supports companies through equity finance, thereby attracting IPOs to Nasdaq Stockholm. Listings on Nasdaq Stockholm have doubled since 2012, while listings in London have steadily declined over the same period.
### The Nasdaq Stockholm IPO Pulse: A Data-Driven Leading Index of IPO Activity
Reflecting its vibrant equity market, Nasdaq Stockholm required its own IPO Pulse. Similar to the U.S.-focused Nasdaq IPO Pulse, the Stockholm IPO Pulse forecasts directional changes in IPO activity using comprehensive data analysis.
Over three decades of data have proven the efficacy of the Nasdaq Stockholm IPO Pulse, with a median lead time of four months in anticipating shifts in IPO activity. The latest upward trend in the Stockholm IPO Pulse commenced in September 2022, preceding a low in IPO activity in September 2023. Since then, IPO activity has risen to a 2½-year high, suggesting continued growth in the coming months.
### The Stockholm IPO Pulse Integrates Six Proven Indicators into One Index
Mirroring the U.S. IPO Pulse, the Stockholm IPO Pulse employs six leading indicators to predict shifts in IPO activity. These indicators include market volatility, recent returns, valuations, consumer expectations, manufacturing prospects, and proprietary IPO data from Nasdaq. The selection of these indicators was tailored to the unique characteristics of the Stockholm market, incorporating broader European data to account for regional interlinkages and including direct listings, which play a significant role in Stockholm compared to the U.S.
### The Nasdaq Stockholm IPO Pulse Signals a Near-Term Uptrend in IPO Activity
The establishment of the Nasdaq Stockholm IPO Pulse extends the data-driven approach to predicting IPO cycles beyond the U.S., offering insights into another critical market where Nasdaq facilitates healthy capital operations. With the Nasdaq Stockholm on an upward trajectory and at a 2½-year high in June, it is anticipated that IPO activity will continue its upward trend in the near term.
Michael Normyle, U.S. Economist at Nasdaq, contributed to this article.
