The global capital markets are booming. The FT reports that companies have raised $400 billion in debt and equity over the first three weeks of the year. That exceeds the average for this time of year by $170 billion.
And it’s not just a debt boom that’s being fueled by the global central banks robbing savers and retirees with ultra-low interest rates. Equity markets are white-hot as well.
Speculative activity in the stock market has reached levels not seen since the height of the dot-com bubble. Stocks don’t often double, triple, and quadruple over the course of a few days or weeks for fundamental reasons.
The FT has more.
Companies have raised $400bn in funds in the first three weeks of 2021 as the torrent of government and central bank stimulus to rescue global economies cascades across capital markets.
The global bond and equity fundraising spree marks one of the biggest hauls of the past two decades for the comparable period and is about $170bn above the average for this time of year, a Financial Times analysis of Refinitiv data shows.
The clamour for fresh cash underscores how unprecedented economic interventions have helped boost financial markets despite the deep economic blow from coronavirus and continued spread of new virus variants.
Corporate debt and equity markets have remained unfazed while much of Europe and the US grapples with a deadly winter wave of Covid-19, allowing company executives to use record low and stable interest rates and rallying stock prices as a chance to expand their businesses, reorganise their shareholder base or simply cash out.
“The only thing that matters to markets is global fiscal and monetary policy,” said John McClain, portfolio manager at Diamond Hill Capital Management. “Markets are priced as though coronavirus doesn’t matter any more.”
Read more here.
