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Global IPO market looks set for a strong 2017: EY report

Geopolitics undermining confidence in IPO market: EY
Geopolitics undermining confidence in IPO market: EY

After a poor 2016 for initial public offerings, the outlook for 2017 is much more upbeat as economies grow stronger, say experts from EY.

The number of IPOs fell by 16 percent year-over-year in 2016 and the amount of capital raised fell 33 percent to $132.5 billion, according to EY's latest Global IPO Trends report.

Political and economic uncertainty in 2016 knocked the confidence of entrepreneurs and investors, deterring IPOs.

But Martin Steinbach, global IPO leader at EY, said the outlook for 2017 was positive.

"We have a strong momentum from Q4, so the IPO activity rose by 25 percent compared to Q3," he told CNBC's Squawk Box Europe.

The prospect for tech IPOs in 2017
The prospect for tech IPOs in 2017

"If we go to equity market indices, they are at an all-time high in many markets. Volatility has fallen, so these are good signs for 2017. Pipelines are building."

However, he added that the economy is in a period of transition following political events such as the U.S. election and Brexit will impact economic policy and make 2017 an interesting year with lingering uncertainty.

Technology, industrial and healthcare were the three top sectors this year, Steinbach added.

"We expect some unicorns (start-ups valued over $1 billion) next year in the U.S. and this may drive also some big tech IPOs in other regions."

Geographically, Asia-Pacific was one of the stronger areas of IPO activity in 2016, according to the report. The area accounted for 54 percent of global capital raised and 60 percent of IPO volume.

The Hong Kong market performed robustly in 2016, though 2017 will be very unpredictable with factors like the interest cycle on an upward path, a strengthening U.S. market and new changes in government policies like the Shenzhen-Hong-Kong Connect Program," said Ringo Choi, EY Asia-Pacific IPO leader, in a press release.

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