[THE VIEW]The Spectacular Revival of the Global IPO Market: Which Path Should We Take?

IPO Boom with 277 Listings in the US by Q3
Global Surge in Europe and Beyond... Prudent Balance Needed

Breaking years of silence, the popularity of initial public offerings (IPOs) is resounding across the global financial markets in 2025. The optimism that pervaded the U.S. market at the beginning of the year has become reality, leading to a spectacular revival of the IPO market, which had long been frozen. Despite the federal funds rate not dropping as much as initially expected, the combination of investors' thirst for new opportunities and companies' rosy outlooks has made the phenomenon of "IPO pops"-where newly listed stocks soar on their first day of trading-an everyday occurrence.

The performance of the U.S. IPO market this year has been nothing short of overwhelming. In 2025, which will be recorded as the strongest year since 2021, a total of 277 securities made successful debuts on the stock market through the third quarter, raising over 50 billion dollars. Particularly notable is the number of large-scale IPOs, with 22 companies raising more than 500 million dollars each, marking remarkable growth in both quantity and quality.

The most dramatic evidence of this revival can be found in the record-breaking first-day returns. Operating companies that went public in the U.S. market this year recorded an astonishing average share price increase of 34% on their first day, compared to the offering price. This figure is twice the average first-day return seen in the lackluster years of 2023 and 2024, and, except for 2020, is the highest in the past decade. Out of 175 listed companies, 72 saw gains of over 10%, and 8 companies achieved returns exceeding 125%, drawing enthusiastic responses from investors.

What is even more encouraging is that this strong performance has not been a one-off event. Companies listed in 2025 have continued the momentum, maintaining an average gain of 27% over their offering price to date. This far surpasses the 15% rise in the S&P 500 Index during the same period, clearly demonstrating that newly listed stocks are leading the market rally.

The positive momentum in the IPO market is also sweeping through Europe. Although the number of new listings on the Nasdaq Stockholm Stock Exchange in Sweden has decreased compared to last year, the amount raised through IPOs has surged nearly sixfold year-on-year. This includes the largest IPOs in Europe since 2022, proving that the heart of the European capital market is beating again. The Stockholm market also met investors' expectations with an average first-day return of 19%.

Indicators that gauge the market’s future are also sending positive signals. The "Nasdaq IPO Pulse Index," which forecasts future IPO activity, has risen for five consecutive months in both the U.S. and Stockholm markets, reaching its highest level in eight months and seven months, respectively. This data-driven outlook strongly suggests that the current IPO boom is likely to continue at least through early 2026, rather than being a short-term phenomenon.

However, the view from Korea on this global IPO fever is inevitably complex. The domestic market sent positive signals in the first half of the year, with around 40 IPOs and strong opening prices compared to offering prices. It is also true that investors were provided with significant profit opportunities. However, the IPO fervor has noticeably cooled in the second half of the year, and this phenomenon should not be seen as purely negative.

Ongoing global economic uncertainty and concerns raised by the new administration about dual listings may, in fact, be providing the overheated market with a much-needed cooling-off period. We must remember that many companies that rushed to go public during the IPO frenzy of 2021 are now trading below their offering prices. From the perspective of investor protection and market soundness, a large number of IPOs is not always desirable.

The path Korea should take is neither unconditional market liberalization nor excessive regulatory tightening. What is needed is careful balance. While respecting market autonomy regarding various listing methods, including dual listings, information disclosure and transparency should be significantly strengthened so that investors can make rational decisions based on sufficient information. At the same time, rigorous verification procedures for companies’ performance and growth potential are also necessary.

Park Sungkyu, Professor at Willamette University, USA