The disappearance of the market for listed equities: Explanations on the demand and supply sides

The market for listed equities is contracting in both the United States and the euro zone. This can be explained by: On the side of investor demand for equities: the dividend yield and the total return on equities are insufficient to correct the very high variability of share prices, which is increased by the herd behaviour that results from passive management (ETFs) and high-frequency trading (algorithms); On the side of companies’ supply of equities: share prices no longer correctly represent the fundamental value of companies, which no longer want to raise equity financing, so listing costs are no longer justified. Listed equities will therefore continue to be replaced by unlisted equities (private equity, family-owned companies).