A remarkable back-of-the-envelope calculation from a currency strategist shows just how much SpaceX’s initial public offering could reverberate in global markets.
Commerzbank currency strategists led by Volkmar Baur crunched the numbers on the IPO that’s intended to raise $75 billion at a $1.75 trillion valuation.
On average, they note, foreign investors hold about 20% of the U.S. stock market, with European investors accounting for half of that.
For tech stocks, that number is probably even higher, given the lack, particularly in Europe, of domestic alternatives.
Baur then notes that 20% of $75 billion amounts to at least $15 billion in capital that is likely to flow to the U.S. on Friday.
In the past quarter, the U.S. current account deficit was $190.7 billion.
“A not insignificant 8% of the quarterly current account deficit could thus be refinanced in a single day. This should therefore support the U.S. dollar, particularly against the euro, if half of the capital inflows come from Europe,” the strategists point out.
And the SpaceX (SPCX) IPO is just the start – not only will more shares become available as the lock-up period ends, there’s also the Anthropic and OpenAI offerings that are expected in coming months.
“The IPO and the anticipated capital inflows demonstrate that the AI boom is supporting not only the U.S. economy but also the U.S. dollar,” they said. But they noted that at least a portion of the IPOs will flow back out of the U.S., to purchase microchips and related supplies from South Korea and Taiwan.
The U.S. dollar index DXY was steady on Wednesday and is up 5% from its lows reached in late January.
