Deutsche Boerse AG : IPO indicator signals slight recovery on the primary market

Price gains of German equities and decline in volatility favour new issues

30. January 2012 Xetra/FWB: Deutsche Börse published the IPO sentiment indicator forecasting issue activity for the 1st quarter of 2012 on Monday. The primary market indicator rose from 27.97 to 29.23 points over the past three months. This is the first increase after a downturn of three consecutive quarters. As the survey by Deutsche Börse shows, market participants anticipate a slight recovery in the primary market for the coming quarter. Uncertainty on the capital markets continues to be reflected on the primary markets. At the same time however, the first encouraging signs indicating a potential turnaround are appearing. The stock markets are experiencing noticeably less volatility. The VDAX-New almost doubled from 18 to around 34 between the end of June and October 2011. Expected volatility for DAX shares currently stands at 24 percent on the VDAX-New. This decline in volatility normally has a positive effect on issue activity. The DAX rose by just under 20 percent from the beginning of October 2011 to the end of January 2012. Analyses show that an upturn on the primary market is usually preceded by an increase in share prices on the respective exchange, and vice versa. This trend could also stimulate issue activity in turn. With a view to current quarter IPO activities, all market participants anticipate a more positive development, although the number of IPOs is generally lower in the first quarter. This is because companies must submit their annual financial statements of the previous calendar year for an IPO. A rise in the volume of new issues on the primary market would thus be more likely to manifest itself in the second quarter of 2012. The IPO sentiment indicator was developed by the Center for Entrepreneurial and Financial Studies (CEFS) at the TU Munich together with Deutsche Börse. The indicator is compiled from surveys of market participants about the IPO climate and calculations by the TU Munich based on Deutsche Börse's trading data. This mood barometer for the primary market is published quarterly and provides investors, issuers and banks a tool with which to assess the market situation. The full report and further information are available at: www.boerse-frankfurt.de/sentiment