(Bloomberg) -- European equity capital markets are missing out on the bullishness in stocks.

In the slowest start to a year since 2019, proceeds from initial public offerings and share sales in listed companies fetched just $1.43 billion in January, data compiled by Bloomberg show. That’s a 79% drop from a year earlier.

The sluggish activity is in marked contrast with the stock market, with the Euro Stoxx 50 Index posting record January gains on optimism about cooling inflation, slowing rate hikes and a Chinese economic reopening. It’s a reflection of lingering uncertainty from 2022, and offerings may pick up in the coming months, says Liberum Capital’s Joachim Klement.

“For an IPO to be successful, one needs stable market conditions for a couple of months and we simply haven’t had that yet,” said Klement, head of strategy, accounting and sustainability at Liberum. “But there are likely quite a few IPOs that are being readied, now that markets have started to recover, and I’m optimistic that we will see more IPOs in the next couple of months.”

The pipeline offers hopes of busier times ahead, and signs are emerging that investors are warming to initial public offerings, albeit at discounted prices. 

German web-hosting business Ionos Group and Italian motor-parts maker EuroGroup Laminations SpA both received enough investor demand to fully cover the deal size within hours of opening up orders. Ionos is set to be the region’s first big listing of the year, with an IPO that may raise as much as €543 million ($592 million). Also expected is the listing of Omani oil drilling firm Abraj Energy.

So far, most of the deals in 2023 have been additional offerings in listed firms, typically the first to recover after a slowdown, given they can be largely executed overnight. The largest was Steinhoff International Holdings NV’s $340 million selldown in Pepco Group NV.

Offerings fell off a cliff last year as surging inflation and aggressive rate hikes spurred global stocks’ worst year since the financial crisis. With January’s sizzling gains already prompting warnings from top market players that optimism has gone too far, a selloff from here on may pose a risk to the catchup in equity capital markets.

©2023 Bloomberg L.P.