The decade of shrinking global stock markets is finally over
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By Justina Lee and Lu Wang
May 3, 2021 4.10pm
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Thanks to record issuance, the SPAC boom and the pandemic-fuelled collapse in buybacks, the supply of equities across the developed world has turned positive for the first time in a decade, according to Sanford C. Bernstein. At $US273 billion ($354 billion) in the 12 months through the end of March, the hand-wringing over the de-equitisation trends of the post-financial crisis era is well and truly over.
What started as a rush to shore up balance sheets during the COVID crisis has morphed into a spree of deals to tap relentless investor appetite for a market defying historic valuations. From Coinbase and Deliveroo to celebrity blank-check firms, initial and secondary offerings jumped to a record $US208 billion in the 13 weeks to April 9, Ned Davis Research data show.
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The strength of the recent rally in cheap stocks could trigger a rare shift in equity market dynamics that some investors expect will fuel the gains of financial and energy companies.
For much of the past decade, so-called momentum stocks have been on fire, layering gains upon gains. Meanwhile, unloved “value” stocks have limped behind, frustrating a generation of fund managers who made their reputation eking out equity market bargains.
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