Almost 80% of companies listing in Stockholm since 2020 are trading below their initial public offering price, pummeled by a combination of economic headwinds and market volatility. That’s undermining prospects for a revival in new listings any time soon.

Shares in no fewer than 160 of the 203 companies which went public during that period are now worth less than when they came to market, data compiled by Bloomberg show. A whopping 30 have lost 90% or more of their value.

While Sweden is facing high inflation and rising interest rates like many other countries, it’s also suffering from one of the deepest housing slumps globally and is set to undergo the worst economic contraction in the European Union this year, according to OECD forecasts. That’s had a knock-on effect on stocks, which are still recovering from a slide of 25% last year.

“The bulk of recent listings have had a tough start,” said Stefan Ward, equity analyst at Pareto Securities in Stockholm, in emailed comments. “Most small- and mid-caps are relative underperformers versus the market.”

Even some of Sweden’s biggest IPOs in recent years, such as Volvo Car AB, have plunged. The automaker, controlled by China’s Zhejiang Geely Holding Group Co., is down 31% from its 53 kronor IPO price in October 2021, hitting a new record low this week.

Similarly, investment group Storskogen Group AB has slid 68% from its listing price the same month, while software firm Cint AB is down 85% since launching in February of that year.

The four companies conducting the largest IPOs in Stockholm since 2020 have seen about $12.6 billion of their combined market capitalization wiped out as stocks had sold off, according to data compiled by Bloomberg.

Those IPO stocks that have performed better than average include engineering companies such as Engcon AB, which makes construction machinery equipment and which has more than doubled since its listing last June.

Poor performances in a near-dormant IPO market are adding to the obstacles facing new listings this year. Not a single company has debuted on the Stockholm main market in 2023.

The halt is in sharp contrast with 2021, when Stockholm was Europe’s second-biggest listings venue, beaten only by London. The surge that year was underpinned by small institutional investors and a retail culture of putting savings into equities, but last year’s decline left many burned.

Track Record

Following the market rout, “investors focused their attention on companies with a longer track record,” Henrietta Theorell, portfolio manager at Swedbank Robur, said in emailed comments. “IPOs became more difficult to sell to institutional investors that had a recent bad experience from the class of 2021.”

One effect of the steep drop in share prices of recently-listed companies is to make them prime takeover targets for suitors looking for cheap assets. Cary Group AB shares were trading 42% below their IPO price when Nordic Capital and CVC Funds swooped in with a takeover bid last June.

Now, market conditions may be improving. Easing concerns over the banking sector have seen volatility come down in Europe, which could encourage issuers to reconsider their case for going public.

While the recent performance of IPO stocks looks bleak, Pareto’s Ward said it’s too early to judge if they will underperform in the long-term, and listings in Sweden will eventually bounce back.

“There’s a healthy pipeline of companies that will come to the market eventually,” Ward said. “But the timing is less clear.”