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Let's talk capital markets, because that's what we do, Yeah, Bloomberg. I don't know if you have noticed this, Carol, well, I know you've noticed it, but IPOs have kind of been on a tear, led by triple digit percent increases for Circle and Corewave, two of the year's five largest IPOs on US exchanges. This year's class of debutants are trading up by a weighted average about fifty three percent. This is according to data compought by Bloomberg Full disclosure just
a little earlier this week. Kind of a market difference from what we've seen in recent years. It's still not what I think investors wanted to see.
But what's great is there's momentum, but it's also performance. Right, investors are staying with these names. We've got a great voice on.
This Michael Harris is back with us. He's got his finger on the pulse of everything happening in capital markets. He's Vice chair in Global Head of Markets at the New York Stock Exchange. He joins us on site here at the Unchartered Community Summit in beautiful Southampton, New York. Last time we spoke with you was at another event, equally beautiful by the way, equally beautiful down to New York exactly that was. That was back in early March. A lot has happened since then. We've kind of had
a round trip when it comes to equity markets. There were some concerns a few weeks after we spoke about companies pulling their IPOs as a result of what was happening with trade. Those IPOs they ended up happening in May and June. How would you describe the environment right now?
I mean, I think, you know, the round trip that you described is exactly the way to think about it. You know, we've seen a complete one hundred and eighty return in terms of sentiment, in terms of where the market backdrop is and it's playing out in the ipo market on a couple different factors. On one hand, we're seeing the subscription levels in terms of interest on IPOs are through the roof. So these deals that are coming to the marketplace are multiple times over subscribed interest from
a wide range of investors. The second part of it is when they do come to the market, the actual pricing outcomes are oftentimes very much in the favor of the issuers. And then the third part of it is the performance, which you mentioned just now. The performance on day one, the follow through in the aftermarket, all the way through the offer to today's performance has been absolutely phenomenal. So that really keeps the cycle in terms of investor
interests continuing to go. And so what we're seeing that play out is really in our backlock. So we see a very active summer, we see an active September, and we think it's going to be a very active twenty twenty five forward.
What does that backlock look like? You say active, I mean, how backed up is it and how eager are these that are back I'm ready to go?
Yeah. Well, you know, for the first part, you're seeing, on one hand, a lot of companies that were delaying their IPOs because of some of the tensions that happened in the beginning part of the year, so some of them have taken a step back, and they were kind of waiting to see, on one hand, just what happened from a geopolitical standpoint, how things are playing out in terms of just the tensions that were in the air.
And also they're waiting to see from the investor community what the reception was going to be for some of the more recent crop of IPOs. So we've gotten those results. Those results have been in many cases much better than they thought they would be, and so they're now ready to push forward. The other part of it is what we're seeing now is a much more diverse array of
companies that are going public. You know, when you and I talked, we were talking about who would be the most likely companies to go public, and they would be likely the more defensive names. Now we're seeing that start to broaden out. So our pipeline looks more diverse than it was back in March. It looks also for larger companies that are also going to be coming So really, in all respects, it tends to be a very healthy outcome.
How has that pipeline diversity shifted in recent years? I remember when I spent three four years working from the floor of the New York Stock Exchange as a reporter, and there was a period in twenty seventeen twenty eighteen, no joke, no exaggeration, almost every other day there was a Chinese company going public in the United States. These were companies we had never heard of. There were companies that we haven't heard from since. I mean, it was
really really wild times. Then there was this crackdown on a lot of these companies that were listed from China in the US. Yeah, has that business completely dried up for you? I mean she and has filed confidentially to with Ibo in.
K We saw that today, Yeah, yeah, yeah, you know, it's interesting. There's still a class of companies that are for the most part microcap in nature, a lot of them domiciled in China, that are still coming public. That's a class of companies that quite frankly, we have the
New York Stock Exchange really don't really look to. Some of our editors tend to focus on that market, and we've seen a number of articles, whether it's from The Wall Street Journal, Financial Times or others, that have really pointed to some of the problems that have become as a result of that, So that's not something we really focus on. But we are still seeing some of those
companies come to the public markets. But I think there's some challenges with that, and there's going to probably continue to be challenges with that going forward. Still out of China, some are you choosing to list in other areas of the world. Yeah, you know, it depends a little bit on market cap, it depends on the sector. I think what you are seeing is a bit of a preference
for many companies just for liquidity. So the US market still continues to be a place where they would like to list, but for larger names, the home markets continue to be also very attractive, you know, Cattle being a great example of that. Early in the year sheann looking to the Hong Kong relative to London. So depending on the name, depending on the sector, depending on the specifics of those companies, home markets can also be a very viable alternative.
To Michael. In some of the cases with the IBOs, we've really seen quite a pop and that for day of trading, right, that's a good sign. You know, we want to see that as certainly a company that going public wants to see that. But it always begs the question were they too conservative in you know, the numbers
that they put out there. I am curious what are the conversations that you're hearing from those folks and those companies that are looking to go public, are they would they rather be a little conservative going in and making sure that that's a good first day of trading.
Yeah. You know, I think when you talk to people in the world of IPOs, whether they're bankers or lawyers, you know, it's often talked about being more of an art than a science, and I think there is a
little bit of truth to that. Yeah, there's a balancing act that always has to happen between getting the right investors, those being the ones that are going to be supportive of your company, not just on day one, but making sure that there's adequate follow through as you think about companies that are going through their cycles of maturity as a public company, right and also companies that are investors rather they're going to be supporting the company from a
liquidity perspective, And there's a balance of the two in the aftermarket. And the reality is until you actually get to that stage where you're in the pricing room and you're actually confronting with management in terms of what the dynamics look like. It's sometimes tough to tell, and so I think the underwriters do a great job of being able to offer what those trade offs are going to be to management teams. Ultimately, the management teams are the
ones that have to make those really tough decisions. But I always think about it in terms of the IPO process. Ultimately it's a day one event, and really what management teams, what their stakeholders need to focus on, is really trying to set up a company for success over the long term and not focus on necessarily the day one performance. Obviously you want a great pricing outcome, but really you're managing this company for the long haul. It's not really just for the day one IPO event.
Can you give us an update on the New York Stock Exchange Texas launch this year. We talked about it back in March.
Yeah.
Yeah, we have, you know, multiple companies that are now listed there. We have a pretty fairly healthy pipeline of companies that are going to be going listing on the exchange over the next several months. We are very close to signing a lease in Dallas. We're going to be very close to actually person that's going to be running that business. So it's really continuing to take on momentum, and so we really are excited about it.
Do you think it's perhaps a hedge in New York City losing its place when it comes to capital markets?
And I ask this kind of came into sharp relief this week with I think a lot of people would argue with what happened in the Democratic primary for the mayoral election, and we don't know who's going to win, but we certainly have a lot of outspoken billionaires who've talked about concerns when it comes to capital markets here in New York in the position of New York City as being the epicenter of Wall Street.
Yeah, I mean for Texas, the way that we've thought about it is when we look at our own listed community and we look at the number of companies in terms of where they're domiciled, Texas really stands out tends to be the area where we have the most number of companies from a really diverse range of sectors that
are represented. And so when we kind of really thought about it from the perspective of what Governor Abbott's doing to try to make sure that the ecosystem of companies within Texas is vibrant, and you know, it intersects with a lot of what we're trying to do in terms of getting a great environment for our own listed community.
It really made sense. So we think about this more from the long term perspective of offering the best environment for our listed community, less in terms of like a short term strategy in terms of what might be happening in the New York ecosystem. We still are big believers that New York continues to be a great place for capital raising and also were companies to be domiciled, but longer term.
Than does that mean, you know, and I'm sure you've had questions about this, and I'm sure we've talked about it. Does it expand the model? Like do you anticipate that there's going to be other major cities that you guys will also have in exchange.
It's hard to know, you know, working at the Crystal Ball, it's really hard to know. Like we're really just focused on kind of where we see the greatest opportunity for our community right now, but we're always for thinking in terms of really trying to see where the greatest opportunity results for our community. Another great example of that I'd point to is extended hours trading. You know, we were the first exchange to look at twenty two to five
trading as an opportunity. We're really happy to see the SEC kind of move towards that, and so we think that there's going to be other opportunities. So we're gonna try to take a leadership position to try to extend our leader.
No, we need less because that means days off for us, because we need a break.
That's the bad news for you guys. You're going to be on twenty two hours a day. That's the outside.
There should be times except for M and A deals. Weekends were quiet, the summer was quiet. A financial basis. Has that it's just been kind of NonStop.
It's been exciting.
Yeah, white House though, in terms of volatility, that really is the thing that impacts the markets, and that's what ultimate little impact right in terms of new listings and stuff everybody's watching.
I think it's a combination of what you're seeing in Washington. It's a combination of what you're seeing with the FED, and it's a combination of what you're going to see on the company level in terms of earnings, yeah right, But in many respects things that's not that different from what it's always been, all right, And so I think the way that we've always tried to approach it is we always want companies to try to look at the
trade off of all those three things. What's the right trade off for themselves as they think about being able to build great companies. But ultimately investors are going to want to invest in great companies that can weather those cycles regardless. All right, it's going to leave with that.
Michael, thank you so much.
I thank you.
It is great seeing you both. Fun to check in with you again.
Michael Harris bes Chairman and global head of Capital Markets at the New York Stock has changed right here on site at the Unsharted Community Summit.
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