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The IPO mania strongly resembles the dot-com bubble of the late 1990s



The chart above shows the FTSE Renaissance Global IPO Index against the S&P 500 from 2017 to 2020 (white) and the similar dynamics of the Bloomberg IPO Index from 1995 to 1999 (blue). Source: Bloomberg Recent initial public offerings (IPOs) have gone so well that it all begins to strongly resemble the late 1990s mania that preceded the bursting of the dotcom bubble. Chinese toy maker Pop Mart International surged 112% on its first day of trading on Friday, and AirBnb did even better, closing 113% above its IPO price. JD Health International was up 56% on Tuesday and DoorDash up 86% on Wednesday. The FTSE Renaissance Global IPO Index, which tracks stocks around the world after its IPO, is up 82% this year, while the MSCI World Index is up just 12%. It is difficult to draw an exact parallel between the current events and the IPO mania of the late 1990s, since the FTSE Renaissance Global IPO Index was launched only in 2009, and the similar index calculated by Bloomberg ceased to exist in 2017. However, the dynamics of the FTSE Renaissance Global IPO Index of the last four years relative to the S&P 500 strongly resembles the similar behavior of the Bloomberg IPO in the period from 1995 to 1999 (see the chart above – approx. ProFinance.ru), said the macro strategy of Cameron Kreis. According to him, if the IPO market continues to follow the pattern of the late 1990s, then soon we will see a real surge followed by a bubble bursting (see the chart below – ProFinance.ru). The chart above shows the FTSE Renaissance Global IPO Index against the S&P 500 from 2017 to 2020 (white) and the similar dynamics of the Bloomberg IPO Index from 1995 to 2000 (blue). Source: Bloomberg “We are definitely worried about the dynamics of the IPO market,” says Miller Tabak strategist Matt Mayley. “However, experience tells us that such a mania is only a signal of the formation of a top in the stock market, and not about the instantaneous bursting of a bubble. In other words, recent events in the IPO market hint that we will see a serious correction in the next six to nine months rather than in the next days or weeks. ” Prepared by ProFinance.ru based on Bloomberg materials On the subject: American broker advises to sharply increase risks in the stock market Bank of America: it’s time to sell shares Extreme optimism creates prerequisites for a collapse of the stock market A bubble in the stock market will burst in the coming weeks or months, the legendary investor predicts

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