"They Keep Selling Off... Will I Lose Out Because of the SpaceX IPO?" [Weekend Money]

SpaceX, OpenAI, and Anthropic Set for Consecutive Listings
Bond Market Stress May Lead to Higher Rates and Economic Slowdown

SpaceX, OpenAI, and Anthropic—these giants are set to dominate the top three spots for largest initial public offerings (IPOs) in history. While investors have high expectations, concerns are also being raised in some corners of the market. Analysts warn that these companies could attract an unprecedented amount of capital, which may not only impact stock market liquidity but also put pressure on the bond market and the real economy.

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On June 13, iBK Securities issued this warning regarding major IPOs in the U.S. stock market. Following SpaceX, OpenAI and Anthropic—each with a market value approaching 1 trillion dollars—are also expected to go public in the fourth quarter of this year. All three companies will surpass the previous record-holder, Aramco, for the largest IPO ever. This means the top three IPOs in history are all set to be listed within this year.

In the past, large-scale IPOs have often served as important inflection points for the stock market. However, previous concerns primarily focused on liquidity issues within the stock market itself. When a major IPO absorbs significant investment capital, it can reduce the amount of idle cash in the market or prompt investors to sell existing holdings to participate in subscriptions. Recent interpretations linking the selling trend among foreign and retail investors in the domestic stock market to participation in the SpaceX listing are based on this same logic.

The problem this time, however, is that the impact may not be confined to the stock market alone. If a series of mega-IPOs occur, corporate demand for funding could surge all at once, fundamentally changing the overall conditions for capital raising in the financial markets.

Jung Yongtaek, an economist at iBK Securities, explained, "In the past, when large-scale IPOs significant enough to burden the U.S. stock market took place, there was often a lagged effect on indicators such as U.S. gross domestic product (GDP) growth rates or coincident indices. In the end, these acted as triggers for economic turning points."

The bond market is typically the first to feel the impact. Ahead of major IPOs, indicators such as the corporate bond stress index or financial stress index often deteriorate, signaling tougher funding conditions. This leads to rising interest rates and increases the funding burden on companies. Consequently, investment slows, employment contracts, consumption weakens, and production activities slacken, collectively creating an economic inflection point.

Jung believes that this pattern is likely to repeat with the upcoming IPOs. Already, capital is rapidly flowing into artificial intelligence (AI)-related companies in the U.S. financial markets. As the scale of AI-related investments grows rapidly, big tech firms are quickly expanding their presence in the capital-raising market. While their share in the corporate bond market was negligible through the first half of last year, this year big tech companies account for the high teens as a percentage of the entire corporate bond market. By next year, that share is projected to rise to the high-20% range.

Jung noted, "Big tech companies have expanded their external funding channels from the bond market and private credit market to include equity as well, in order to meet massive investment demand. In this increasingly polarized environment, the credit risk of companies left behind could rise even further."

A key feature of the recent U.S. economy is that investment, rather than consumption, is driving the cycle. For investment to continue, demand is important, but so is the ability to secure stable funding. If credit conditions deteriorate, the investment cycle is inevitably shaken.

Jung added, "If AI investment enters a correction phase or contracts, this current economic expansion is also likely to reach a turning point. Because a change in funding conditions is likely to be the trigger for that inflection point, rather than AI demand itself, these mega-IPOs are a cause for concern."

This content was produced with the assistance of AI translation services.