Index providers should not bend the rules for Elon Musk
Stock index providers are weakening listing standards to court mega-IPOs like SpaceX, exposing passive investors to unnecessary risks.
文章讨论了纳斯达克、富时和标普等股指提供商正在修改上市规则，以吸引SpaceX等超大型IPO的问题。主要变化包括缩短新股「磨合期」和降低公众持股比例要求。作者认为这些改变将损害被动投资的核心优势——分散化投资，并使指数投资者面临更大的价格波动风险。文章警告说，随着科技股集中度已因AI热潮而上升，进一步放松规则可能在市场下行时引发严重后果。
In fanciful moments Elon Musk speculates about artificial intelligence finding a way to allow travel at nearly the speed of light. By comparison, his reported aim of listing SpaceX, his rocket firm, at a valuation of $1.75trn, seems only modestly ambitious. Two other starry companies may also soon seek initial public offerings: Anthropic and OpenAI, both AI model-making labs, are mulling listings this year or next. The three firms' combined valuation could exceed $3trn. The prospect of their debuts—by far the largest public markets have seen in years—will thrill those who lament that big companies are choosing to stay private for longer.
Mr Musk and his bankers are now bargaining with stock indices and exchanges for the privilege of hosting SpaceX. He wants his firm to join key indices like the NASDAQ 100 and S&P 500 quickly, giving it access to trillions in index-linked capital; more than $600bn invested in passive funds are tied to the NASDAQ 100 alone. For now, the indices are obliging. On March 30th Nasdaq said it was adopting rules that will delight the superstar firms. The FTSE and reportedly S&P are considering similar updates. Unfortunately, those changes are misguided, and will expose investors to unnecessary risks.
Two main ideas are under consideration. One is to shorten the "seasoning" period that a firm's stock must go through before it is eligible to join an index. Nasdaq is cutting its three-month seasoning minimum to 15 trading days; the FTSE has suggested a mere five trading days. The second reform is to reduce the percentage of shares a firm needs to offer publicly (its "free float") before being added to an index.
Indices' desire to reflect the growth of some of the world's most dynamic firms is understandable. So far, many punters have been unable to invest in some of AI's brightest stars; index inclusion is a way to help them do so. Yet changing the rules to suit SpaceX will force index investors to choose between selling or weathering wild swings in prices.
Consider the flaws of shorter seasoning periods. Nasdaq last trimmed its seasoning window more than a decade ago, ahead of Facebook's IPO in 2012. After a glitchy debut, the shares took more than a year to get back to their initial value, swinging wildly along the way. As insiders offload their stakes, retail investors may bear the costs. That is an excellent argument for patience.
Free-float rules are more worrying still. Offerings with low floats have tended to underperform the market over time. But the fewer shares firms offer to the public, the greater the price index-tracking funds must pay when they are obliged to buy them. What is more, Nasdaq says some firms can initially be weighted at three times the percentage of shares they float, instantly giving SpaceX and its kind outsize influence on the index's performance, before investors have time to assess their valuation. The change risks turning indices into barometers less of the wider stockmarket than of Mr Musk's latest antics.
Both proposals undermine the main reason why passive investing became so popular: because it offers exposure diversified across the whole market, rather than a narrow bet on one company or industry. Stockmarkets have already become more concentrated as a result of the AI boom. As worries about valuations and the technology's profitability mount, index operators might come to regret increasing concentration even further. Should tech stocks come to look less attractive, indices will draw investors' ire rather than their cash.