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Uncertainty, volatility weigh on global IPO market: EY

The number of new companies floating on the world's stock markets hit a seven-year low in the first three months of 2016, as a raft of economic and political concerns weighed on the IPO market, new data shows.

Only 167 initial public offerings (IPOs) were completed during the first three months of 2016, raising $12.1 billion, according to EY's latest IPO trends report. When compared to the same period in 2015, total capital fell by 70 percent, while volume slipped 39 percent.

"The global IPO activity (has) slowed significantly," Martin Steinbach, executive director at EY, told CNBC Tuesday, adding that this was evident "across all regions" worldwide.

As of late, the world has been experiencing a "cocktail of volatility factors" said Steinbach, such as low oil prices and fears of a global economic slowdown, however he remained optimistic that activity would pick up as volatility starts to show signs of "trending down."

As a result, companies are adopting a "wait-and-see" approach as to whether a stock market flotation is the best option. The report suggests issuers may choose to look at alternative prospects, such as mergers and takeovers, that are less susceptible to volatile market conditions.

Based on the activity seen in the first three months of 2016, EY expects political and economic uncertainty to continue to weigh on investors, with the refugee crisis and U.K.'s EU referendum impacting Europe, while the upcoming presidential election is "clouding" the U.S.' economic and foreign policy outlook.

However, as Steinbach said, there is some upside. Activity in markets worldwide is expected to improve as the year continues, with monetary policy decisions from the U.S. Federal Reserve, European Central Bank, Bank of Japan, and People's Bank of China, hoping to boost activity in later months.

The Asia-Pacific region may be an area for concern economically, however Steinbach said Asia remained on "the leaderboard in IPOs" as it is still a growing market. In fact while IPO volumes slipped 31 percent in Asia-Pacific's first quarter — compared to 2015's Q1 — it delivered 61 percent of global IPO deals within 2016's winter months.

On top of that Japan is expected to deliver "another bumper year", with investor sentiment in the region remaining "broadly solid" as it delivered its best first quarter results since 2008, the report added.

"While there are many potential risks and investors face an uncertain outlook, the IPO pipeline remains healthy in a number of regions," Jackie Kelley, EY Americas IPO Leader, said in a statement accompanying the report.

"Signs of stabilization in the economic and political backdrop are likely to prompt an increase in activity in the coming quarters," Kelley added saying EY expected IPO levels to "trend closer to historic norms" soon.


By CNBC's Alexandra Gibbs, follow her @AlexGibbsy and @CNBCi