Wall Street Preparing Cash Reserves Ahead of Tech Stock Super IPO Wave

BlockBeats News, May 28th. As super unicorns such as SpaceX, OpenAI, and Anthropic have successively pushed forward with their U.S. stock market IPOs, large Wall Street institutions have begun to adjust their holdings in advance to increase cash reserves. John Flood, Managing Director of Global Banking and Markets at Goldman Sachs, pointed out that historically, prior to the four largest IPOs, stock mutual funds have proactively increased their cash reserves. Currently, several large funds are once again increasing their cash holdings, with some passive index funds even considering reducing their existing holdings of large tech stocks to make room for the upcoming new index constituents. SpaceX's expected market valuation at IPO is around $1.5 trillion to $1.75 trillion, while OpenAI and Anthropic are also valued close to a trillion dollars each. The consecutive listings of these three companies will reshape the major stock index weighting landscape.

Index compilers are accelerating rule modifications to adapt to this change. FTSE Russell has implemented a new rule allowing newly listed companies to be included in the Russell Index after trading for only 5 days once they meet the free-float market cap threshold, seen by the market as almost tailor-made for SpaceX; Nasdaq announced in March this year a fast-track inclusion mechanism for new stocks, and S&P Dow Jones Indices is also advancing similar schemes, warning that maintaining the old rules could "affect the overall effectiveness of the index as a benchmark." Once included in the index, large passive funds will have to allocate the relevant stocks, potentially becoming the most stable and massive source of demand for these super IPOs. However, there are also concerns in the market that passive funds might be forced to buy in at a high premium and bear excessive risk with the high-volatility new stocks during the initial inclusion phase.