▲ SK Hynix displayed on a billboard in New York, U.S.
A diagnosis has emerged that a flood of large-scale stock issuances, driven by new listings and other factors, is threatening the bull market that has persisted for three years and nine months.
The Wall Street Journal (WSJ) reported on July 14 (local time) that concerns are growing that an "oversupply of stocks" could erode the momentum of the bull market as major global corporations engage in record-level stock issuances to raise capital.
Recently, the global capital market has been flooded with an unprecedented volume of stock issuances.
SpaceX issued a record-breaking 75 billion dollars (approximately 111 trillion won) for its initial public offering (IPO), and Google's parent company, Alphabet, previously conducted a paid-in capital increase worth 85 billion dollars (approximately 126 trillion won).
Additionally, SK Hynix issued American Depositary Receipts (ADRs) worth 26.5 billion dollars (approximately 38.6 trillion won), the largest ever for a foreign company.
According to financial data provider Dealogic, the volume of new shares supplied to the market so far this year has reached 344.7 billion dollars, surpassing the total annual supply for each year from 2022 to 2025.
Furthermore, with AI startups like Anthropic preparing for listings, the supply pressure is expected to intensify.
Companies are rushing to issue stocks to secure funds for AI infrastructure investment.
Hyperscalers (large data center operators), which had previously been buying back their own shares based on cash flow, are now reducing share buybacks and raising cash by issuing stocks and bonds.
The total capital expenditure (CAPEX) of these companies this year is projected to reach 800 billion dollars, a significant increase from 450 billion dollars last year.
It is expected to exceed 1 trillion dollars next year.
The market is concerned because a surge in stock supply has historically been a typical signal appearing at the end of a bull market.
Rob Arnott, founder of U.S. investment firm Research Affiliates, warned that "a surge in stock supply tends to appear in the latter stages of a bull market," citing the precedent where an oversupply of stocks triggered the dot-com bubble burst (1999–2000).
On the other hand, there are counterarguments that the market's fundamentals are strong enough that this is not a level to be concerned about.
The argument is that the U.S. stock market is currently valued at 80 trillion dollars, making the impact of new issuances minimal.
Howard Marks, co-founder of Oaktree Capital, assessed that it is difficult to predict when the excess supply of stocks and the reduction in share buybacks will negatively affect the market, adding that these two factors alone will not end the bull market.
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