IPO Waves Could Trigger Market Crashes: Expert Warns

Summary

Major initial public offerings, or IPOs, historically precede market corrections, and a coming wave of tech IPOs could crash markets. This phenomenon is linked not to the IPOs themselves, but to the expiration of lockup periods, which releases a significant supply of securities. Experts predict that by six or twelve months after these lockups expire, potentially trillions of dollars in new securities could hit the market. This surge in supply, combined with sticky inflation that keeps interest rates high and a potential decline in the rate of growth for AI capital expenditures, could set the stage for a bearish period around the year two thousand twenty-seven. In other geopolitical news, Nvidia is no longer selling chips to China as China develops its own capabilities and due to ongoing US-China trade tensions. While concerns about geopolitical risks to semiconductor supply chains are valid, the expert believes China is patient regarding Taiwan and is unlikely to disrupt global supply chains, as it benefits from the current multipolar world order. The expert also noted that the United States is projected to develop domestic chip manufacturing capabilities within approximately five years, which could shift global relevance away from Taiwan. Regarding the Strait of Hormuz, the expert believes the market has priced in a return to normal traffic, and a US-Iran deal is less critical than the ongoing, albeit permeable, transit of oil tankers. Looking ahead, the expert suggests a shift from solely investing in US tech to a more diversified global portfolio, highlighting energy and private investments as areas of potential growth, even within the US.