Over in the US, Wall Street executed the biggest initial public offering (IPO) of all time in June, when SpaceX (NASDAQ:SPCX) listed.
Looking ahead, there are the potential floats of AI juggernauts Anthropic and OpenAI.
The result? Huge fees for Wall Street banks.
The Financial Times reported recently:
“The blockbuster listing of SpaceX generated US$500 million [$713.8 million] in fees across Wall Street, including US$100 million for Goldman and Morgan Stanley and US$75 million each for JPMorgan, Citi, and BofA. Goldman increased investment banking revenues by more than 50% from a year earlier, to US$3.4 billion.”
Unfortunately, it’s not the same here in Australia for the ASX.
The Australian Financial Review reports:
“It has certainly been a lean six months for the local IPO market,” said Rushil Paiva, a senior equity analyst at Glenmore Asset Management. “A combination of the Iran war and inflation in Australia have made for a very tough backdrop.”
The report also notes that several resource IPOs are now trading below their listing price, and from one sector especially:
“Gold explorers in particular headlined the laggards in the first six months.
“MB Gold [ASX:MBG] is down 25% from its IPO price to close at $0.15 on Wednesday. Valiant Gold [ASX:VAL] closed at $0.20, down from its March IPO price of $0.25, while 49 Metals [ASX:49M], which debuted at $0.20, closed at less than $0.10.”
The gold price just had its worst quarter in 13 years between April and June. It’s down nearly 30% since its 29 January record near US$5,595 ($8,019) an ounce.
In other words, gold firms coming to ASX earlier in the year carried the tailwind and excitement of a rising gold price.
That momentum disappeared over the past three months.
The weak quarter for the gold price has come at an inopportune time for new gold entrants to the ASX. Investor sentiment and liquidity are leaving the sector.
This kind of volatility is inherent in mining investment.
Even so, the timeline to explore and develop a gold project runs for years. Nobody knows where the gold price and sentiment could be in six, 12, or 18 months.
A lot will depend on the direction of the US dollar
The AI investment boom is drawing in a record level of foreign investment into the US.
This, in turn, is helping support the US dollar, especially relative to the perception this time last year that it was inevitable for it to be ‘debased’.
There’s another kicker for the US dollar. The higher the oil price, the greater the value of exports out of the US oil industry.
That supports the dollar too.
The implication is clear for gold: a lower oil price and fewer flows into US (AI) stocks could ease the upward pressure on the US dollar, and help the US gold price recover.
That, in turn, could shift sentiment back toward the Aussie gold sector, including the recent floats.
There are also longer-established ASX gold explorers, including Sunshine Metals (ASX:SHN), Antipa Minerals (ASX:AZY), and Aguia Resources (ASX:AGR), that should remain of high interest.
Write to Callum Newman at Mining.com.au
Images: Unsplash
