Equity Issuance: Alka Seltzer, Anyone?

- The equity pipeline for this year is estimated to be US$116bn — "Add on what has already been done year to date and, at US$ 291bn, it will set a new record. Issuance will be heaviest in China, India and Singapore, and lightest in Taiwan, Thailand and the Philippines. By sector, financials, materials and energy lead."
- Relative to market cap, issuance will be 2.9%, slightly above average — "There is little relationship between markets and issuance: they are coincident at best. It the market’s down, issuance will be down and vice versa. Issuance does not cause the market to fall, it mere slows the ascent. Issuance is in excess of dividends paid and inflows, so we need to see a shift out of bank deposits or more interest from overseas investors."
- Best way to avoid the Alka Seltzer is stay away from the crowd — "With cash levels just at averages, investors may have to sell something in order to buy something. Consensus overweights are thus vulnerable to being sold down, since you can’t sell what you don’t own after all. Div financials, materials and consumers are vulnerable were this to happen."


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