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DON'T WORRY ABOUT THE IPO WAVE

The next few months are expected to bring a wave of mega IPOs that are likely to raise tens of billions of dollars each, but Deutsche Bank analysts said that investors shouldn't fret about a potential liquidity drain.

SpaceX looks to be the first out of the blocks, targeting a valuation of $1.75 trillion and a June listing.

Other private companies expected to launch public offerings soon, possibly in 2026, include ChatGPT owner OpenAI, Claude owner Anthropic and payments company Stripe.

Investors may be starting to worry that the surging issuance wave would be funded from the broader equity market and cause a selloff, but Deutsche Bank doesn't believe that to be the case.

"Equity returns in past waves were very strong," DB said in a note.

"We identify several upcycles in equity issuance over the past 3 decades. Equity markets rallied strongly through these periods with median returns of 8% in the first 3 months and over 20% in 12 months."

Demand for equities endures. Bank of America's latest "Flow Show" noted U.S. equities received inflows for the eighth straight week, the longest stretch since December.

"Prior waves of issuance did not derail equity markets as they occurred in periods of strong demand driven by rising risk appetite and expectations of future growth," DB said.

"In the current context, the capacity, as well as the willingness to invest into equities remains strong."

(Samuel Indyk)

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