"Longest Period in 20 Years"... Tech Company IPO 'Drought' Amid US Stock Market Decline

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The decline of the U.S. New York stock market, which began amid concerns over an economic recession and soaring inflation, is leading to an unprecedented drought in initial public offerings (IPOs) of U.S. technology companies, major foreign media reported on the 18th (local time).

According to an analysis by Morgan Stanley's Technology Equity Capital Markets team, as of the 21st, the period without any technology company IPOs raising more than $50 million (approximately 7 billion KRW) will reach 238 days. Foreign media reported that this surpasses the previous records set during the 2008 global financial crisis and the early 2000s dot-com bubble burst, when funding for technology companies was severely constrained.

Technology stocks experienced record-breaking gains last year amid a booming stock market, leading to a series of technology company IPOs. However, this year, the market has rapidly frozen due to the Federal Reserve's interest rate hikes and soaring inflation. The Nasdaq Composite Index, which is technology-stock heavy, has fallen about 28% this year. Considering that the S&P 500 index declined by 19% during the same period, it is interpreted that technology stocks have been hit harder.

Matt Walsh, Head of Technology Equity Capital Markets at SVB Securities, stated, "There is currently tremendous uncertainty in the market, and uncertainty is the enemy of IPOs," adding, "We believe it is necessary to see some stabilization in the outlook, and investors will likely remain cautious until they think they can move forward beyond the risks."

Earlier, research firm Dealogic reported that the amount of funds raised through traditional IPOs from the beginning of the year until the end of last month totaled $5.1 billion. This is less than one-sixth of the $33 billion raised through IPOs during the same period a year ago. Experts expressed concerns that if the current trend continues, this could be the worst year since Dealogic began tracking IPO fundraising in 1995.

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