{"text":[[{"start":6.1,"text":"The writer is senior adviser at Engine AI and Investa, and former chief global equity strategist at Citigroup"}],[{"start":13.85,"text":"Shrinking equity supply has helped this bull market defy the bears. Fewer new shares have been listed. More old shares have been delisted. This may be changing."}],[{"start":24.6,"text":"Back in 2003, public equities were looking very cheap compared with bonds. The S&P 500 index had dropped 50 per cent from post-dotcom-bubble-crash peaks and 10-year US Treasury yields, which move inversely to prices, had fallen to 3 per cent. However, institutional investors, and their regulators, had been so scarred by the bear market that they could not, or would not, close this valuation gap. "}],[{"start":51.05,"text":"This offered an opportunity to less traditional buyers. Listed companies bought their own shares via buybacks, or their competitors’ shares via debt-financed takeovers. Private equity investors joined in by borrowing cheap debt to delist public companies. Issuance via IPOs, secondaries and equity-financed mergers and acquisitions slowed to a trickle."}],[{"start":71.85,"text":"Equitisation was over, de-equitisation had begun. Public markets started to shrink. Predicting this trend helped make my career as an equity strategist. And it just won’t go away. Both the US and UK public equity markets have “de-equitised” to some extent in each of the past four years, according to Datastream."}],[{"start":93.64999999999999,"text":"It looks very different to the acceleration of equity issuance associated with the last major tech-driven bull market. In 1998-2000, the US IT sector increased its equity base by 40 per cent. In the past four years, it has shrunk it by 4 per cent."}],[{"start":110.29999999999998,"text":"This is because large-cap US IT companies haven’t needed new funding. In fact, their capex-lite business models have allowed them to return cash to investors. The Magnificent 7 Big Tech stocks bought back $230bn of shares in 2025. Some of that was used to finance employee share plans, but it also provided the funding for IPOs elsewhere in the sector. This tech bull run has been self-financed. "}],[{"start":134.35,"text":"It all seems very different to previous bubbles. Canals in the 1800s, railways in the 1840s, radio stocks in the 1920s and telecoms, media and technology shares in the 1990s were all notoriously capital-intensive booms."}],[{"start":151.2,"text":"But Big Tech’s capex-lite model seems to be changing. Alphabet, Amazon, Meta and Microsoft are expected to collectively invest $725bn this year as they go all-in on the AI boom. Consequently, Meta and Alphabet have paused their buybacks. That’s a big change from the combined $92bn they recycled back to the market in 2024."}],[{"start":174.54999999999998,"text":"Apple has chosen to sit out this capex boom and has announced another $100bn of share buybacks in 2026. But even here the positive impact will be reduced. At a $4.3tn total market cap, $100bn buys a lot less Apple stock than it used to."}],[{"start":192.74999999999997,"text":"Of course, there have been large amounts of new tech shares issued and capital raised, but this has not been via the public markets. Instead, OpenAI and Anthropic have been able to privately raise a combined $152bn in 2026."}],[{"start":208.24999999999997,"text":"This private market equitisation now looks set to spill over into the public market. SpaceX, OpenAI and Anthropic are exploring IPOs, seeking collective valuation of up to $4tn. The public equity market will not need to soak up all these shares immediately, but earlier-stage private investors (and employees) will surely want to cash out, at least partially. Their unsold stock may overhang the public markets for years. A $4tn collective valuation would amount to a substantial 6 per cent equity expansion of the US public equity market, a figure last seen in the late 1990s bubble."}],[{"start":246.24999999999997,"text":"De-equitisation is a key reason why the current bull market has been able to defy high valuations, rising interest rates, trade wars and geopolitical tensions. There have been periodic market wobbles, but these have not been preceded by the equity oversupply associated with the bursting of previous bubbles. Instead, listed companies have kept buying back their shares. Private equity has kept taking companies private. The de-equitisation put remained in place. "}],[{"start":274.25,"text":"And, as any undergraduate economist knows, shrinking supply and rising demand should lead to higher prices. The bears have missed this point."}],[{"start":281,"text":"However, we can finally see a meaningful amount of public equity supply coming down the track. The de-equitisation “put” — where shares are supported by buybacks or deals to take companies private if they fall too far — may start to fade, at least in the US."}],[{"start":297.5,"text":"Back in the late 1990s bull market, a senior equity capital markets banker said to me: “If the ducks are quacking, feed them.” In US big-cap tech, they have been quacking for some time. It finally looks like they are about to be fed."}],[{"start":318.9,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778919367_7279.mp3"}