Davos 2024: Looking Ahead to a Year Unlike Any Other

Seems only yesterday I was bidding farewell to Davos for another year.

The theme of the 2023 World Economic Forum was “Cooperation in a Fragmented World.” I guess the jury’s still out on whether that’s been achieved because the 2024 WEF theme is “Rebuilding Trust.”

So, as I return today to this alpine town in the Swiss canton of Graubünden, I’m focused on the people and organizations that access the financial markets during the year and what it will take to rebuild trust in those markets. The fragmented world of 2023 led to a lot of volatility over the last 12 months.

For sure, some of those people and organizations will be in Davos. World leaders, policy experts and CEOs convene here every January. But their constituents — millions of employees, customers, stakeholders and citizens — will be back home, rightly skeptical that we possess a credible crystal ball.

I consider myself lucky. From our unique vantage point running the world’s largest exchange group, we don’t have to rely on our gut. We sit on top of a trove of data that shows exactly how markets react to a range of external stimuli. Based on that, I’m envisioning three principal trends that may shape our fragmented world in the 12 months ahead and, hopefully, rebuild some trust.???

Trend 1: The volatility isn’t over yet.

“Expect the unexpected” is both a wise quote and a pithy summary of what the data from our exchanges are revealing.

During the past two years, our interconnected global markets have influenced, and will continue to influence, one another. What happens in Ukraine, Russia and Poland — to say nothing of the Middle East or China — has ripple effects felt in Singapore, Sao Paulo and San Francisco.

Those gyrations are reflected in the markets across time zones. Overnight trading in Asia, for example, will continue to impact the open in New York. Interest rate moves in Washington will continue to move the needle in Brussels. Energy markets trading in London will translate to price swings for heating homes in Illinois. The changing climate in Africa will impact the cost of a cup of coffee in Canada.?

And just as this global volatility will translate to up and down days on the tickers reflecting stock prices streaming above the New York Stock Exchange, the fixed income market, too, may face unsteady moments. The ICE BofA MOVE Index, a measure of volatility in U.S. bond portfolios, hit its highest point since the global financial crisis in March 2023 when the bottom fell out of a series of regional banks. The index, which we publish daily, has remained significantly elevated since 2022 from pre-pandemic levels.

In this environment, rebuilding trust isn’t easy, but it helps to operate a robust, resilient exchange welcoming all buyers and sellers. The NYSE’s job is to provide the most dependable, deterministic, tech-forward trading infrastructure allowing participants to manage their risk effectively and efficiently.?

For example, in late 2023 we completed the multi-year rollout of our state-of-the-art trading platform, Pillar, to NYSE American Options, the last of our seven NYSE exchanges to get a full top-to-bottom technological rebuild. By the first week in 2024, our average response times on that market were cut in half, despite an 80% year-over-year increase in systemwide message volume to record levels.?

Trend 2: The IPO market will become more active.

Following a quiet two years for IPOs in 2022 and 2023, we are gearing up for an active season in 2024. We just welcomed homebuilder Smith Douglas Homes to our NYSE community last Thursday and have multiple companies on the road, right now, actively planning their IPOs in the coming weeks.?

An IPO, or other initial listing, is the beginning of an important new phase in a company’s evolution, a moment that requires much thought and preparation.

For a select group of companies, public-investor interest has always been there. The variable is timing, tied to the valuation a company can achieve from an IPO and the level of market volatility. The combination of these factors has prompted many companies to postpone new listings during the past two years, resulting in the formation of a tremendous backlog.?

Now, with volatility abating and valuations increasing, companies are making plans to tap the market.

That said, not every private company is ready to become public. In fact, last year 70% of the IPOs executed on U.S. markets did not even qualify for listing under the rules that govern the New York Stock Exchange.?

When a company is listed on the NYSE, it has accomplished something extraordinary. For its investors. For its peers. For its business partners. For its employees. It is an aspirational, celebratory moment when a company joins the most prestigious community in the world.?

And we are planning for many celebrations in 2024.

Trend 3: The U.S. capital markets will continue to lead the world.

The United States, where the New York Stock Exchange was founded in 1792, remains the undisputed home of capital raising. Of this I’m sure: that trend will continue into 2024, and beyond.?

Our capital markets offer issuers the broadest base of investors, and the deepest pools of liquidity, found anywhere in the world. This is not only evident from the U.S.-headquartered companies that have had a home on our exchange for centuries, but also the global companies founded less than a decade ago that are seeking NYSE listings for their shares.?

Take Flutter Entertainment plc, for example, which was founded in 2016. The Dublin-headquartered home of FanDuel and PokerStars, among many other brands, plans to list its shares on our exchange later this month, pending regulatory approval. Additionally, both CRH plc, an Irish building materials business, and AngloGold Ashanti, a South African mining company, saw the promise and possibility of an American listing and switched their primary trading venues to the NYSE in 2023. We welcome them with open arms.

There’s another important reason our markets are the envy of the world. Public companies in the U.S. must meet numerous requirements that bring additional rigor and transparency to their operations. In this light, we work closely with regulators to make sure investor protections and investor access are appropriately balanced.?

A recent example is last week’s approval — and the spree of listings that quickly followed — of the first U.S. spot Bitcoin ETFs. The historic offerings finally provide investors with exposure to cryptocurrency with all of the customary protections of a listed fund.

The leadership of our markets is important for the reasons described, but particularly so during periods of heightened uncertainty. This year, countries comprising more than 60% of the world’s economic output will hold elections, including the United States, where our 2024 cycle is in full swing and primary elections begin this month. We should not lose sight of our U.S. markets’ global status at such a moment.

As World Economic Forum participants divine new approaches to building and sustaining trust during this weeklong gathering in the mountains of Switzerland, know that you can turn to the NYSE at any time to help navigate what is sure to be a year unlike any other. We are honored to be your first call for insights on our economy and our markets from our own iconic setting in New York City’s Financial District. Trust, after all, begins at home.