By Barbara Kollmeyer
Compared with the rest of Europe and Wall Street, the past week of trading for London is nothing big to write home about, but it did have Moonpig.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -1.90% flattened out on Friday, set for a 1.3% weekly gain that puts it behind a robust week elsewhere. The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -1.58% is set to gain 3.6% and the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.31% nearly 5%. The session had little earnings news to offer up outside of a blockbuster set of results from Beazley /zigman2/quotes/209655690/delayed UK:BEZ -2.13% , whose shares surged 12% after the reinsurer swung to a loss, but said 2021 was looking up.
What London markets did have this week were new listings, including a strong debut on Tuesday from online greetings-cards and gifts retailer Moonpig /zigman2/quotes/224387775/delayed UK:MOON -1.39% . Shares rocketed 29% higher within minutes of trade kicking off. It is an example of investors seeking out businesses that have managed to thrive amid the COVID-19 pandemic.
Infrastructure and private-equity investment manager Foresight /zigman2/quotes/224420183/delayed UK:FSG -5.37% began conditional trading on the London Stock Exchange on Thursday. Unconditional dealings are due to begin Feb. 9. Those shares were up 0.2% on Friday.
Moonpig shares rose another 0.2% on Friday. From a debut of 350 pence, Moonpig was trading at 428 pence, which if it holds represents a 22% gain for the week.
“I think the fact that they traded at a premium to their listing price is indicative there is certainly demand for shiny new things but I still can’t escape the feeling that there might be a little bit of froth in these early days,” said Michael Hewson, chief market analyst at CMC Markets.
The initial public offering is the second-largest U.K. listing so far this year, after Dr. Martens /zigman2/quotes/224328095/delayed UK:DOCS -3.61% made its market debut on the London Stock Exchange last week. The cult maker of British boots and shoes saw its shares surge 22% in its debut session. The company’s shares have gained 5% week to date.
Newly listed companies are still holding on to gains, though, said Russ Mould, investment director at AJ Bell, in emailed comments to MarketWatch.
“Both Moonpig and Dr. Martens have been very warmly received by investors: Moonpig is up by around a fifth from its IPO price of 350p and Dr Martens is trading more than 25% above its 370p offer price. Foresight Group is also up nicely from its 420p listing price,” said Mould.
“At the moment, money is cheap, markets are liquid and investors are looking for returns that exceed cash and protect wealth from inflation. This all is fertile ground for new floats,” he said.
But he added that investors need to take a close look at any new company they are thinking of investing in, and ensure it fits with their own criteria such as target returns, time horizon and risk appetite.
“Any investor must approach an IPO in the same way they would research shares in a firm that is already public, by assessing its business model, competitive position, financial performance, financial strength and boardroom acumen. The financial decision is then whether the stock comes at a fair valuation or not, and offers the right balance between downside protection and upside potential,” he said.