Mega IPOs threaten US market tailwind

InvestorDaily

Having supported US equity returns for decades, the firm has warned de-equitisation is now going into reverse as rising issuance and fresh share supply from the AI IPO wave flood the market. De-equitisation refers to US companies buying back far more stock than they have issued over the past two decades, steadily shrinking the pool of shares available to investors. According to the firm, the process has added an estimated 0.7 percentage points a year to US equity returns between 2015 and 2025.   

Ninety One argued the bigger risk isn’t the listings themselves, but the lock-up expiries ahead, when tradable share supply could rise sharply. Despite recent attention being placed on AI’s impact on demand, Ninety One Investment Institute director, Sahil Mahtani, said the firm is asking investors to think about what it means for the supply of equity. “A shrinking supply of publicly traded shares has quietly supported US equity returns. That tailwind is now going into reverse,” Mahtani said.

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