As is well known, the stock market is extremely susceptible to rumors and speculation, but is a collapse really imminent? Or is it just creating panic? A collapse only occurs when market sentiment sharply turns negative. Therefore, let's analyze the current situation and see if it is enough to influence market sentiment.
This significant decline has been observed in major global markets, particularly in the United States, Europe, and the United Kingdom. The number of listed companies in these countries has been continuously decreasing in recent years. Trading common sense tells us that stocks are an excellent indicator of a region's financial strength, but nowadays this relationship seems far from reality.
We can see that the United States is caught in a dilemma between inflation and interest rates, while the US stock market continues to break historical highs. The German economy is also experiencing setbacks, but the DE index is performing well.
So, if it's not from the hands of the economy, what's driving the recent decline?
In 1996, the United States had over 8000 publicly traded stocks, but by 2022, this number had dropped to 4642. Similarly, the number of listed companies in the UK has decreased by 25% over the past decade, but Brexit is the main reason for this decline.
This phenomenon has led people to speculate that publicly traded stocks may one day become an endangered asset class. Previously publicly traded companies have been acquired by private equity firms, resulting in a decrease in the number of publicly traded stocks.
New companies are no longer as keen on listing on the stock exchange due to increasingly strict reporting requirements and regulatory scrutiny, which may lead to non listed companies being more likely to accept transactions from private equity firms. Private equity firms such as BlackRock, Vanguard, and State Street have controlled over $15 trillion in assets, equivalent to over a quarter of the S&P 500 index (US500).
The complete privatization of global stock markets is not unimaginable But this won't happen soon.
For traders, the reduction of listed companies is both a challenge and an opportunity. As the number of listed companies decreases, price fluctuations may intensify, requiring new risk management strategies.
Fast growing economies such as India continue to break IPO records. In addition, with the recovery of IPOs and investment activities, regions such as the Middle East also provide opportunities for diversified investments.
We may see a change in the intensity of trading volume related to the region, and BRICS countries and other de dollarization initiatives may exacerbate this change. For decades, the saturation of mature markets has been high, but emerging markets often experience extreme situations such as long-term rebounds and rapid crashes.
Although the stock market seems to be on a downward trend, these phenomena may only be signals of a transitional stage. For now, the stock market remains vibrant, and despite the gradual shift towards privatization, savvy traders still have the opportunity to find attractive trades.
Please grasp the pulse of market sentiment fluctuations and be ready to enter or exit the market at any time. for convenience,Exness trading applicationIt's a wise choice, no matter where you are, you can easily view your investment portfolio.
Therefore, although headline news may suggest that the stock market is on the brink of collapse, traders may prefer to see this as a process of development that often brings new, untapped opportunities for those who do not adhere to conventions.
