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With the Iran conflict reshaping energy markets, central banks turning hawkish, and gold in freefall despite the chaos, the safe haven playbook in 2026 is more complicated than ever.
Quick facts
- Gold has fallen more than 20% from its all-time high, despite an active war in the Middle East
- The Singapore dollar is near its strongest level against the USD since October 2014
- The Reserve Bank of Australia (RBA) hiked rates to 4.10% in March 2026 as Iran-driven oil prices push Australian inflation higher
1. Gold (XAU/USD)
Gold remains the most widely traded safe haven globally. It benefits from geopolitical stress, US dollar weakness, and negative real interest rate environments. However, its short-term behaviour in 2026 demands explanation.
Despite an active war in the Middle East, gold has sold off sharply. The likely cause is the Fed trimming its 2026 rate cut projections, citing hotter-than-expected producer inflation and Strait of Hormuz-driven oil prices creating inflation persistence.
Ultimately, gold's bull case rests on falling real yields and a weaker dollar, and right now neither condition is in place. Traders should be aware that during an inflationary supply shock like the one the Iran conflict has delivered, gold does not always behave as expected.
However, if you zoom out, the longer-term picture reinforces gold’s safe-haven status, ending 2025 as one of its strongest years on record.
Key variables to watch: US Federal Reserve guidance, real yields, and USD direction.
2. Japanese Yen (JPY)
The yen has long functioned as a safe-haven currency thanks to Japan's status as the world's largest net creditor nation. In times of stress, Japanese investors tend to repatriate capital, driving the yen higher.
However, that dynamic seems to have shifted in 2026 so far. The yen is down 6.63% YoY, near its weakest level since July 2024, and surging oil import costs are weighing on the currency.
The yen's safe-haven role has not disappeared, though. It tends to reassert itself during sharp equity selloffs and liquidity events. But in an oil-driven inflation shock, it faces structural headwinds.
Key variables to watch: BOJ rate decisions, US-Japan yield differentials, and any intervention signals from Japanese authorities.
3. Swiss Franc (CHF)
Switzerland's political neutrality, account surplus, and strong institutional framework make the franc a reflexive safe-haven currency. Unlike the yen, the CHF is holding up in the current environment, with the franc gaining against the dollar in 2026, and EUR/CHF remaining stable.
For traders across Europe and the Middle East, CHF is often the first port of call during stress events.
Key variables to watch: Swiss National Bank intervention language, European geopolitical developments, and global risk indices.
4. US Treasury Bonds (US10Y)
Under normal conditions, US government bonds are some of the deepest, most liquid safe-haven instruments in the world. But 2026 is not normal conditions…
Yields have been rising, not falling, meaning bond prices are moving in the wrong direction for anyone seeking safety.
When yields rise during a risk-off event, it signals the market is treating bonds as an inflation risk rather than a safety asset.
However, short-duration Treasuries like bills and 2-year notes are a different story. They may offer higher income with less duration risk than longer-dated bonds, which is why some investors use them more defensively in volatile periods.
Key variables to watch: Fed communication, CPI and PCE data, and whether the 10Y yield breaks above 4.50% or pulls back below 4.00%.
5. Australian Dollar vs. US Dollar (AUD/USD): inverse play
The Australian dollar is widely considered a risk-on currency, tied closely to global commodity demand and Chinese growth.
In risk-off environments, AUD/USD typically falls. A falling AUD/USD can serve as a leading indicator of broader global stress, which can be useful context for traders with regional exposure.
The RBA hiking cycle (two hikes since the start of 2026) is providing some floor under the AUD, but in a sustained global risk-off move, that support has limits.
Key variables to watch: RBA forward guidance, Chinese PMI data, iron ore prices, and oil's impact on Australian inflation expectations.
6. US Dollar Index (DXY)
The US dollar acts as the world's reserve currency and a reflexive safe haven during acute stress. When liquidity dries up, global demand for USD tends to spike regardless of the underlying trend.
Over the past 12 months, the dollar has lost ground as global confidence in US fiscal trajectory has wavered. But over the past month, it has firmed, supported by a hawkish Fed and elevated geopolitical risk.
In risk-off environments, the USD continues to attract safe-haven flows. However, rising oil prices can increase inflation risks, complicating Federal Reserve policy expectations.
Key variables to watch: Fed rate path, US inflation data, and global liquidity conditions.
7. Singapore Dollar (SGD)
Less discussed globally but highly relevant across Southeast Asia, the SGD is one of the most quietly resilient currencies in the current environment.
The Singapore dollar has advanced to near its highest level since October 2014, supported by safe haven flows and investors drawn to Singapore's AAA-rated bonds, a dividend-heavy stock market, and predictable government policies.
The MAS manages the SGD through a nominal effective exchange rate band rather than an interest rate, giving it a different character from other safe-haven currencies.
For traders with exposure to Indonesia, Malaysia, Thailand, Vietnam, and the broader ASEAN region, USD/SGD can act as a practical benchmark for regional risk appetite.
Key variables to watch: MAS policy band adjustments, regional trade flows, and USD/Asia dynamics more broadly.
8. Cash and Short-Duration Fixed Income
Sometimes, the most effective safe haven can be to simply reduce exposure. With central bank rates still elevated across major economies, cash and short-duration government bonds can offer a meaningful yield while sitting outside market risk.
The RBA raised the cash rate to 4.10% at its March meeting. The Bank of England held at 3.75%, while the ECB kept its deposit facility rate at 2.00% and main refinancing rate at 2.15%. Across all major economies, short-duration government paper is offering a real return for the first time in years.
In a volatile environment, capital preservation can sometimes matter more than return maximisation.
Key variables to watch: Central bank meeting calendars across all major economies, and any shifts in forward guidance on the rate path.
What to Watch Next
Fed inflation data. Core PCE is the single most important data point for gold, bonds, and the dollar right now. Any surprise in either direction could move all three simultaneously.
Yen intervention risk. The yen is near levels that have previously triggered action from Japanese authorities. Traders with Asia-Pacific exposure should monitor closely.
RBA's next move. With Australia now at 4.10% and inflation still above target, the question is whether the hiking cycle has further to run. The next RBA meeting is on 5 May.
Geopolitical trajectory. Any move toward de-escalation in the Middle East would quickly reduce safe haven demand and rotate capital back into risk assets. The reverse is equally true.
China's growth signal. A stronger-than-expected Chinese recovery could lift commodity currencies and reduce defensive positioning across Asia-Pacific.
The Longer-Term Lens
The 2026 environment is exposing that the effectiveness of safe haven assets depends on the type of shock, not just its severity.
An inflationary supply shock like the Iran conflict has delivered is one of the most difficult environments for traditional safe havens.
Gold falls as real yields rise. Bonds sell off as inflation expectations climb. Even the yen can weaken as Japan's import costs surge.
What has held up are assets with institutional credibility, managed frameworks, and deep liquidity regardless of macro conditions. The Swiss franc, Singapore dollar, and short-duration cash instruments fit that description better than gold or long bonds do right now.
In 2026, the question for traders is not "which safe haven?" It is "a safe haven from what?"
March sets up as a “repricing month” for US assets. The FOMC meeting is the centre point, with CME FedWatch showing a pause as the dominant baseline. Markets could become more sensitive to surprises in such circumstances, especially prints that alter the perceived balance between sticky inflation and slowing demand.
Rates and policy
Key dates
- FOMC meeting (two-day): 18–19 March (AEDT).
- Fed decision (FOMC statement): 5:00 am, 19 March (AEDT).
- Fed press conference: 5:30 am, 19 March (AEDT).
What markets look for
Even if rates are left unchanged, the decision can still move markets through updated projections, the policy statement, and the Chair’s guidance.
With a pause largely priced, attention shifts away from “move vs no move” and toward whether the Fed’s messaging validates the current rate path or nudges expectations toward a higher-for-longer stance or earlier easing.
Any change in the balance of risks (inflation vs growth/financial conditions) can drive a repricing in front-end rates, USD, and equity multiples.
Inflation and the link to FedWatch pricing
Key dates
- Consumer Price Index (CPI): 11:30 pm, 11 March (AEDT).
- Personal Income & Outlays/ PCE (January PCE): 11:30 pm, 13 March (AEDT).
What markets look for
When markets are anchored around a pause, inflation can become a key swing factor for the expected path of policy.
A firmer inflation profile can push the implied rate track higher and tighten financial conditions, while softer prints can reinforce the pause narrative and pull forward cut expectations.
Inflation data that arrives ahead of the policy decision tends to have greater influence on immediate repricing, while the later inflation/consumption pulse can shape end-of-month positioning and the market’s confidence in the disinflation trend.
Jobs data: the next test of rate expectations
Key dates
- ISM Manufacturing PMI: 2:00 am, 3 March (AEDT).
- ISM Services PMI: 2:00 am, 5 March (AEDT).
What markets look for
Payrolls, unemployment and wage signals can reset the tone for yields, USD and equities ahead of the major inflation and policy catalysts.
In practice, surprises often show up first in front-end rates and rate volatility, then filter into broader risk sentiment and equity pricing, especially if the data challenges assumptions about cooling demand and easing wage pressure.
Equities, tariffs and geopolitics
What markets look for
US indices remain highly sensitive to the rate narrative. The S&P 500 Index (SPX) and Nasdaq 100 Index (NDX) have traded at relatively elevated levels in recent weeks, with the VIX providing a read on implied volatility conditions.
Beyond the data calendar, the tail-end of earnings season may still generate stock-specific volatility. Tariffs and trade policy also remain a live macro risk, with official guidance for importers able to affect costs, margins and sector sentiment.
The US Supreme Court has also held that IEEPA does not authorise the imposition of tariffs under that statute. That may add uncertainty around the legal footing of Trump's tariffs.
On the geopolitical front, renewed Middle East tensions have coincided with firmer crude pricing, which may influence inflation expectations and risk appetite around CPI and Fed week (among other drivers).
The global initial public offering (IPO) market saw a resurgence in 2025. Proceeds increased 39% to US$171.8 billion across 1,293 listings, the sharpest annual rebound since the post-pandemic boom.
That momentum is now building into 2026 for what some financial analysts speculate could be the biggest IPO year in history.
A handful of mega-cap private companies, including SpaceX, OpenAI, and Anthropic, are exploring going public this year, with combined valuations that could exceed US$3 trillion.
2025 IPO market data
Top IPO candidates in 2026
1. SpaceX - US$1.5T valuation
SpaceX revenue reportedly hit US$15 billion in 2025, with analysts projecting an increase to US$22-24 billion in 2026. The company has been cash-flow positive for years, driven largely by its Starlink satellite broadband network.
Following its February 2026 all-stock acquisition of Elon Musk's AI company xAI, the combined entity also encompasses Grok AI and the social media platform X (Twitter).
Leading financial analysts have reported SpaceX is targeting a mid-2026 listing. Its next funding round is estimated to raise around US$50 billion, putting its initial market cap at US$1.5 trillion, which would make it the second-highest IPO valuation of all time.
This valuation would mean SpaceX would trade at 62–68 times projected 2026 sales. A steep premium that requires massive growth assumptions around Starlink and longer-term space-based AI ambitions.
2. OpenAI - US$850B valuation
OpenAI, the company behind ChatGPT, now reports more than 800 million weekly active users of its groundbreaking AI product.
Originally a nonprofit research lab, it has restructured into a for-profit entity developing large language models for consumer, enterprise, and developer applications.
OpenAI is reportedly targeting a Q4 2026 IPO, finalising a US$100 billion-plus funding round (its largest ever), which would put its valuation at US$850 billion.
However, OpenAI still needs to overcome some near-term hurdles to achieve the potential associated with such a high valuation.
It projects US$14 billion in losses in 2026 and does not expect profitability before 2029. It is facing intensified competition from Google Gemini and other AI startups cutting into its market share, and Elon Musk has filed a lawsuit against the company seeking up to US$134 billion in damages.
3. Anthropic - US$350B valuation
While OpenAI has leaned into consumer products, Anthropic has built its business around enterprise adoption. Roughly 80% of its revenue comes from business customers, and eight of the Fortune 10 are now Claude users.
Anthropic closed a US$30 billion funding round in February 2026 at a US$350 billion valuation, more than double its US$183 billion valuation from five months earlier.
Anthropic’s annualised revenue has been growing at 10x per year since 2024, well outpacing OpenAI’s growth of 3.4x per year. If this trend continues, Anthropic revenue could pass OpenAI by mid-2026. However, since July 2025, Anthropic’s growth rate has slowed down to 7x per year.
Anthropic has engaged law firm Wilson Sonsini to begin IPO preparations, and the recent appointment of former Microsoft CFO Chris Liddell to its board signals a governance push ahead of a potential late-2026 listing.
The company is not yet profitable, but its enterprise-heavy revenue mix and rapid growth trajectory make it one of the most closely watched IPO candidates this year.
4. Stripe - US$140B valuation
Stripe processed US$1.4 trillion in total payment volume in 2024, roughly 1.3% of global GDP. Half the Fortune 100 now use Stripe, and recent moves into stablecoins and AI-to-AI "agentic commerce" payments are expanding its addressable market.
Stripe remains one of the most anticipated fintech IPOs globally, but the company has shown a lack of urgency to list in the past. Co-founder John Collison said at Davos in January 2026 that Stripe was "still not in any rush."
Rather than pursuing an IPO, Stripe has conducted tender offers every six months at rising valuations, providing employee liquidity without surrendering control.
These frequent tenders effectively function as a private-market alternative to going public. However, a traditional IPO is still on the cards in 2026, with the company's February tender offer valuing it at US$140 billion or more, and profitability since 2024 removing one of the key barriers to listing.
5. Databricks - US$134B valuation
Databricks completed a US$5 billion funding round in February 2026 at a US$134 billion valuation.
The company's annualised revenue exceeded US$5.4 billion in January 2026, growing a massive 65% year-on-year, with AI products generating US$1.4 billion.
CEO Ali Ghodsi has said the company is prepared to go public "when the time is right," with most analysts expecting a H2 2026 listing. At US$134 billion, Databricks is valued at more than twice publicly traded rival Snowflake (~US$58 billion).
Bottom line
2026 has the potential to be the biggest IPO year by valuation in history. With the most likely candidates, SpaceX and Databricks, matching the total valuation of all 2025 IPOs on their own.
If major AI players like OpenAI and Anthropic, as well as world-leading payment fintech Stripe, also list before the end of the year, 2026 could see over US$3 trillion in total value added to global markets through IPOs alone.
March’s foreign exchange (FX) markets could be shaped by several high-impact releases clustered around the first half of the month. China PMIs, Australia GDP, Japan GDP and the Federal Reserve’s March meeting could all influence FX sentiment as the month progresses.
Quick facts
- US rate expectations remain stable, with CME FedWatch implying a greater than 85% probability of no rate change at the March FOMC meeting.
- China PMIs, CPI/PPI and trade data will help shape early-month regional risk tone.
- Australia's GDP, RBA decision, labour force data and CPI create a concentrated domestic event window for AUD.
- Japan GDP and the Bank of Japan (BoJ) policy meeting may influence domestic yield repricing and JPY volatility.
- Euro area CPI, industrial production and the ECB Monetary Policy Decision remain key for EUR stability.
US dollar (USD)
Key events
- Nonfarm Payrolls: 12:30 am, 7 March (AEDT)
- Consumer Price Index (CPI): 11:30 pm, 11 March (AEDT)
- Retail Sales: 11:30 pm, 17 March (AEDT)
- Federal Reserve policy decision: 5:00 am, 19 March (AEDT)
- Federal Reserve press conference: 5:30 am, 19 March (AEDT)
What to watch
The USD remains primarily driven by inflation and labour data and their implications for Federal Reserve pricing.
CME FedWatch pricing indicates that markets are assigning a greater than 85% probability of no rate change at the March FOMC meeting. This suggests positioning is currently anchored around a pause, increasing sensitivity to any inflation surprise that could shift expectations.
With a pause largely priced in, USD direction may hinge more on inflation trajectory and longer-term policy expectations than the decision itself. Firmer CPI or resilient labour data could reinforce yield support.
Key chart: US dollar index (DXY) weekly chart
Euro (EUR)
Key events
- Euro area CPI (flash estimate): 10:00 pm, 3 March (AEDT)
- Euro area industrial production: 9:00 pm, 13 March (AEDT)
- ECB Monetary Policy Decision: 12:15 am, 20 March (AEDT)
- ECB press conference: 12:45 am, 20 March (AEDT)
- Eurozone flash PMI: 8:00 pm, 24 March (AEDT)
What to watch
EUR direction remains linked to inflation persistence and whether growth data stabilise expectations around ECB policy.
Sticky inflation or improved activity data could limit easing expectations and support the EUR. Softer inflation and weaker production data may renew downside pressure, particularly if US data remain firm.
EUR/USD daily structure shows consolidation following an upside extension earlier in the year. Short-term momentum has moderated, with price holding above longer-term support levels.
Key chart: EUR/USD daily chart
Japanese yen (JPY)
Key events
- Japan GDP (Q4 2025, 2nd estimate): 10:50 am, 10 March (AEDT)
- Bank of Japan policy meeting: 18–19 March (AEDT)
- BOJ statement on monetary policy: 19 March (AEDT)
What to watch
JPY remains sensitive to domestic growth data and Bank of Japan policy decisions. Yield expectations and policy normalisation signals continue to influence USD/JPY and cross-JPY volatility.
The BOJ policy meeting and subsequent communication may influence short-term volatility and longer-term rate expectations, and by extension JPY sentiment.
Stronger GDP or policy signals reinforcing normalisation could support JPY via domestic yield adjustments. More cautious messaging may maintain yield differentials in favour of USD and AUD.
Key chart: AUD/JPY weekly chart
Australian dollar (AUD)
Key events
- Australia GDP: 11:30 am, 4 March (AEDT)
- RBA Monetary Policy Decision: 2:30 pm, 17 March (AEDT)
- Labour Force Survey: 11:30 am, 19 March (AEDT)
- Consumer Price Index (CPI): 11:30 am, 25 March (AEDT)
What to watch
AUD faces a domestic calendar centred around the 16–17 March RBA meeting. Growth, labour and inflation releases cluster within a three-week window, increasing the potential for volatility.
Stronger GDP or persistent inflation could reinforce policy caution and support AUD. Softer labour or CPI outcomes may weigh on rate expectations and pressure AUD, particularly against USD and JPY.
Chinese data early in the month may also influence regional sentiment and commodity-linked currencies such as AUD.
March opens with early-month Chinese activity and inflation data, followed by an influx of market-relevant data reports from Japan, while the Reserve Bank of Australia (RBA) meets mid-month, with markets currently pricing a pause in the policy rate
China
China’s March outlook is front-loaded with activity, inflation and trade releases that can quickly set the regional risk tone. Market reaction may hinge on policy interpretation and liquidity conditions as much as it does on any data surprises themselves.
Key dates
- China Manufacturing & Non-Manufacturing PMI: 12:30 pm, 2 March (AEDT)
- China Caixin PMI: 5 March (AEDT)
- China CPI: 12:30 pm, 9 March (AEDT)
- China PPI: 12:30 pm, 9 March (AEDT)
- China trade balance: 10 March (AEDT)
Market relevance
China's March profile is front-loaded and data-driven, with the first 10 days likely to be a focus for broader regional sentiment.
The PMI data could provide an early signal on industrial and services momentum, while the CPI could give a read on domestic demand and pricing pressure.
With the Shanghai Composite still trading near levels seen in the mid-2010s, market reactions may depend on policy interpretation and liquidity conditions as much as they do on headline surprises.
Japan
Japan's month centres on growth confirmation followed by a policy signal that may recalibrate the yen’s momentum.
Key dates
- Japan PMI: 11:30 am, 2 March (AEDT)
- Japan preliminary Q4 GDP: 10:50 am, 10 March (AEDT)
- BOJ policy decision: 19 March (AEDT)
Market relevance
The Nikkei 225 is currently near all-time highs, which may increase sensitivity to policy tone.
GDP could help validate growth sustainability and domestic demand trends, while BOJ guidance could shape the yield curve and rate expectations.
Australia
Australia’s March calendar centres on growth, policy and inflation signals that could shape expectations for the domestic outlook and AUD. If policy holds steady, focus is likely to shift toward how durable growth is and how sticky inflation remains.
Key dates
- Australia GDP (National Accounts): 11:30 am, 4 March (AEDT)
- RBA monetary policy decision: 2:30 pm, 17 March (AEDT)
- Australia labour force: 11:30 am, 19 March (AEDT)
- Australia CPI: 11:30 am, 25 March (AEDT)
Market relevance
While the RBA decision shapes rate path expectations and forward guidance, Labour data informs the wage and consumption outlook, and CPI confirms or challenges the inflation trajectory.
The ASX 200 is trading near record highs, and AUD has demonstrated multi-year relative strength versus several major crosses. If the RBA pauses, focus may shift from rate direction to growth durability and inflation persistence.
Markets move into the week ahead with inflation data across Australia and Japan, alongside elevated geopolitical tensions that continue to influence energy prices and broader risk sentiment.
- Australia Consumer Price Index (CPI): Inflation data may influence the Reserve Bank of Australia (RBA) policy path, with the Australian dollar (AUD) and local yields sensitive to any surprise.
- Japan data cluster: Tokyo CPI (preliminary) plus industrial production and retail sales provide an inflation-and-activity pulse that could shape Bank of Japan (BoJ) normalisation expectations.
- Eurozone & Germany CPI: Flash inflation readings will test the disinflation narrative and influence ECB rate-cut timing expectations.
- Oil and geopolitics: Brent crude has posted its highest close in around six months amid renewed Middle East tensions, reinforcing energy-driven inflation risk.
Australia CPI: RBA expectations to change?
Australia’s upcoming CPI release will be closely watched for signals on whether inflation is stabilising or proving more persistent than expected.
A stronger-than-expected print could be associated with higher yields and a firmer AUD as rate expectations adjust. A softer outcome could support expectations for a steadier policy stance.
Key dates
- Inflation Rate (MoM): 11:30 am Wednesday, 25 February (AEDT)
- CPI: 11:30 am Wednesday, 25 February (AEDT)
Monitor
- AUD volatility around the release.
- Local bond yield reactions.
- Interest rate pricing shifts.
Japan inflation and growth data
Japan’s late-week releases combine Tokyo CPI (preliminary) with industrial production and retail sales, offering a broader read on price pressures and domestic demand.
Tokyo CPI is often watched as a timely signal for national inflation dynamics and BoJ debate. Industrial output and retail spending add context on activity.
Surprises across this cluster can drive sharp moves in the JPY, particularly if results shift perceptions around the pace and persistence of BoJ normalisation.
Key dates
- Tokyo CPI: 10:30 am Friday, 27 February (AEDT)
- Industrial Production: 10:50 am Friday, 27 February (AEDT)
- Retail Sales: 10:50 am Friday, 27 February (AEDT)
Monitor
- JPY sensitivity to inflation surprises
- Bond yield moves in response to activity data
- Equity reactions if growth momentum expectations shift
Energy and safe-haven flows
Oil prices have climbed to their highest close in around six months amid renewed Middle East tensions.
Recent reporting on heightened regional military activity and shipping-risk headlines near the Strait of Hormuz has reinforced energy security as a market focus. The Strait of Hormuz remains a widely watched chokepoint for global energy flows.
Higher oil prices can feed into inflation expectations and influence bond yields. At the same time, geopolitical uncertainty can support the USD through safe-haven demand and relative rate positioning.
Monitor
- Brent crude price levels
- USD strength versus major currencies
- Yield movements as inflation risk premiums adjust
Eurozone and Germany inflation
Flash inflation readings from Germany and the broader eurozone (HICP) will test whether the region’s disinflation trend remains intact.
Germany’s release can influence expectations ahead of the aggregated eurozone figure. If core inflation proves sticky, expectations around the timing and pace of potential European Central Bank easing could shift.
Key dates
- Germany Inflation Rate: 12:00 am Saturday, 28 February (AEDT)
Monitor
- EUR volatility around inflation releases
- European sovereign bond yields
- Rate-cut probability adjustments
Key economic events
From tech disruptors to defence contractors, some of the market's most talked-about companies start their public journey through an initial public offering (IPO). For traders, these initial public listings can represent a unique trading environment, but also a period of heightened uncertainty.
Quick facts
- An IPO is when a private company lists its shares on a public stock exchange for the first time.
- IPOs can offer traders early access to high-growth companies, but come with elevated volatility and limited price history.
- Once listed, traders can gain exposure to IPO stocks through direct share purchases or derivatives such as contracts for difference (CFDs).
What is an initial public offering (IPO)?
An IPO is when a company offers its shares to the public for the first time.
Before performing an IPO, shares in the company are typically only held by founders, early employees, and private investors. Going public makes the shares available to be purchased by anyone.
Depending on the size of the company, it will usually list its public shares on the local stock exchange (for example, the ASX in Australia). However, some large-valuation companies choose to only list on a global stock exchange, like the Nasdaq, no matter where their main headquarters is located.
For traders, IPOs are generally the first opportunity to gain exposure to a company’s stock. They can create a unique environment with increased volatility and liquidity, but also carry heightened risk, given the limited price history and sensitivity to sentiment swings.
Why do companies go public?
The biggest driver to perform an IPO is to access more capital. Listing on a public exchange means the company can raise significant funds by selling shares.
It also provides liquidity for existing shareholders. Founders, early employees, and private investors often sell a portion of their existing holdings on the open market, realising the returns on their years of support.
Beyond the monetary benefits, going public means companies can use their stock as currency for acquisitions and offer equity-based compensation to attract talent. And a public valuation provides a transparent benchmark, which is useful for strategic positioning and future fundraising.
However, it does come with trade-offs. Public companies must comply with ongoing disclosure and reporting obligations, and pressure from public shareholders can become a barrier to long-term progress if many are focused on short-term performance.
How does the IPO process work?
While the specifics vary by jurisdiction, going from a private company to a public listing generally involves the following stages:
1. Preparation
The company first selects the underwriter (typically an investment bank) to manage the offering. Together, they assess the company's financials, corporate structure, and market positioning to determine the best approach for going public. It is the heavy planning stage to make sure the company is actually ready to go public.
2. Registration
Once everything is prepared, the underwriters conduct a thorough due diligence check and then lodge the required disclosure documents with the relevant regulator. These documents give a detailed disclosure to the regulator about the company, its management, and its proposed offering. In Australia, this is typically a prospectus lodged with ASIC; in the US, a registration statement filed with the SEC.
3. Roadshow
Executives at the company and underwriters will then present the investment case to institutional investors and market analysts in a “roadshow”. This showcase is designed to gauge demand for the stock and help generate interest. Institutional investors can register their interest and valuation of the IPO, which helps inform the initial pricing.
4. Pricing
Based on feedback from the roadshow and current market conditions, the underwriters set the final share price and determine the number of shares to be issued. Shares are allocated on the ‘primary market’ to investors participating in the offer (before the stock is listed publicly on the secondary market). This process sets the pre-market price, which effectively determines the company’s initial public valuation.
5. Listing
On listing day, the company’s shares begin trading on the chosen stock exchange, officially opening the secondary market. For most traders, this is the first point at which they can trade the stock, either directly or through derivatives such as Share CFDs.
6. Post-IPO
Once listed, the company becomes subject to strict reporting and disclosure requirements. It must communicate regularly with shareholders, publish its financial results, and comply with the governance standards of the exchange on which it is listed.
IPO risks and benefits for traders
How do traders participate in IPOs?
For most traders, participating in an IPO comes once shares have listed and begun trading on the secondary market.
Once shares are live on the exchange, investors can buy the physical shares directly through a broker or online exchange, or they can use derivatives such as Share CFDs to take a position on the price without owning the underlying asset.
The first few days of IPO trading tend to be highly volatile. Traders should ensure they have taken appropriate risk management measures to help safeguard against potential sharp price swings.
The bottom line
IPOs mark when a company becomes investable to the public. They can offer early access to high-growth companies and create a unique trading environment driven by elevated volatility and market interest.
For traders, understanding how the process works, what drives pricing and post-IPO performance, and how to weigh potential rewards against the risks of trading newly listed shares is essential before taking a position.