The number of publicly traded companies in the United States is shrinking, with only about 4,300 compared to 7,300 in 1996. Private equity firms are to blame for this as they acquire or invest in companies, keeping them private and out of public scrutiny. This trend has raised concerns about transparency and investor trust in the market, as private companies can hide ownership and financial information. Jamie Dimon, CEO of JPMorgan Chase, expressed worries about this trend in his annual shareholder letter, emphasizing the importance of maintaining a clear understanding of the US economy.
The increasing pressure of quarterly earnings and shareholder activism are driving companies away from public markets. Dimon highlighted the negative effects of quarterly earnings reports, which can lead companies to resort to accounting tricks to boost short-term numbers. Shareholder meetings have also become contentious, with activist investors using them to influence corporate actions. The rise of proxy advisers, who provide guidance to institutional investors on voting decisions, has further complicated corporate governance, raising questions about the influence of these firms on US corporate governance.
Remaining private may be more lucrative for companies, as private equity investments have consistently outperformed other asset classes over the past 25 years. However, Dimon warned that if changes are not made soon, the shrinking public market could become a more significant problem. The shares of Trump Media & Technology Group, owned by former President Donald Trump, have experienced a rapid decline in value, signaling concerns about the company’s long-term prospects. Despite recent losses, the stock has more than doubled in value this year, raising questions about its true worth in the market.
In an effort to secure the supply of advanced semiconductor chips, the US government has agreed to provide $6.6 billion to Taiwan Semiconductor Manufacturing Company (TSMC) to build three factories in Arizona. This investment is part of President Joe Biden’s push to increase domestic chip production and reduce dependence on foreign suppliers. TSMC, which manufactures a large portion of the world’s most advanced chips, plans to invest over $65 billion in Arizona, signaling a significant commitment to the US market. Shares of TSMC closed higher following the announcement, reflecting investor confidence in the company’s growth prospects.
