Hedge Funds Trim Tech Holdings Ahead of SpaceX IPO as Hong Kong Stocks Face Liquidity Pressure
Alina Collins
Ahead of SpaceX's June 12 listing, hedge funds are dumping U.S. tech stocks and even going short — the largest IPO in history is reshaping global equity supply-demand, and Hong Kong liquidity is in the crosshairs.
Where is the money coming from?
According to J.P. Morgan, the Magnificent Seven — Nvidia, Apple, Amazon, Alphabet, Meta, Tesla, Microsoft — have all fallen since June 5. The Roundhill Magnificent Seven ETF is down more than 2.4% over the same period.
U.S. software stocks saw heavy selling last week, while semiconductors drew "strong demand"; financial-themed ETFs were the most-bought category.
This means → money is not vanishing — it is rotating out of richly valued tech leaders into cash positions earmarked for the IPO and into cheaper sectors.
Why is Hong Kong feeling the pressure too?
T. Rowe Price global equity specialist Rahul Ghosh noted: markets tend to weaken ahead of large IPOs because investors need to raise cash.
Offshore traders may sell Hong Kong stocks to fund SpaceX subscriptions or post-listing purchases.
The bigger squeeze lies ahead: roughly HK$760 billion (≈US$97 billion) in Hong Kong shares come off lock-up in Q3, compounding global fund flows toward U.S. new issuance — the liquidity test for Hong Kong extends well beyond SpaceX alone.
How large is the new-issuance wave?
Fed data show U.S. new equity issuance hit US$389 billion in Q1 2026 — the second-highest quarter on record since 1996, trailing only the early-2021 SPAC boom.
In plain terms = the volume of "freshly sold shares" hitting the market is near an all-time high — buyers' dollars must now stretch across far more offerings.
Unlimited Funds CIO Bob Elliott summarized: buybacks — companies purchasing their own stock, effectively shrinking share supply — are slowing, while new IPOs and secondary offerings from the likes of Alphabet are surging.
Why have tech giants stopped buying back stock?
The cash-rich mega-caps that were the market's biggest buyers for years are now funneling free cash flow into AI infrastructure.
Oracle's latest earnings showed a sharp rise in capex; the company signaled it may issue more shares next year. Alphabet has flagged similar plans.
This means → the old playbook — "giants earn, giants buy back, the bid holds" — is breaking down. Cash is shifting from buybacks to data-center construction; the market is losing its largest buyer and gaining its largest seller.
Will this end the bull market?
Goldman Sachs said this week that record U.S. equity issuance "will not end the bull market in 2026," arguing supply remains modest relative to overall market capitalization.
The real test lies ahead: whether Anthropic, OpenAI, SpaceX, and the pipeline of mega-IPOs behind them can continue to be absorbed by the market.
In plain terms = one or two mega-IPOs, the market can digest. The question is whether appetite holds when giants are lining up one after another — and that verdict is still out.
Content is for reference only, not financial advice.