Latest / International Business with Fexingo: Global Trade, Cross-Border Deals, and Multinational Operations / How SpaceX IPO Reshapes Global Capital Flows
Transcript
- Lucas: So today is June 12th, 2026, and I think it's safe to say we just witnessed the biggest IPO in history. SpaceX started trading on the Nasdaq this morning under the ticker S-P-C-X, and by the close, its market cap was over two trillion dollars. Elon Musk is now officially the world's first trillionaire. Luna: It's staggering. The stock popped 28 percent on day one. I mean, we've seen big tech IPOs before — Alibaba, Facebook — but nothing on this scale. Lucas: Right. And what's interesting for our show — International Business — is less about the celebration and more about what this does to global capital flows. When a two-trillion-dollar company appears overnight, money has to come from somewhere. It doesn't just materialise. Luna: Exactly. So who's buying? And who's selling to get the cash? Lucas: Great question. Let's start with the institutional side. Pension funds, sovereign wealth funds, endowments — they all have allocation targets. If you're a fund with a mandate to hold, say, 5 percent in single stocks, and you already have Apple and Microsoft, now you have to make room for SpaceX. That means selling something else. Luna: And a lot of that 'something else' is international equities. We saw emerging market ETFs like EEM and VWO actually had a decent week — up 3.3 and 2.1 percent respectively. But that might be a short-term rotation out of SpaceX profit-taking into beaten-down markets. Lucas: Yeah, the five-day numbers are interesting. South Korea's EWY surged 6.8 percent, Mexico's EWW up 4.9 percent, Brazil's EWZ up 3.9 percent. But the narrative underneath is that the strong dollar — the trade-weighted index is at 120.1 — is still crushing emerging market currencies. The yen is at 160 to the dollar. So any bounce in EM stocks could be fleeting if capital flows back to the US. Luna: And that's the key tension. SpaceX is a us based company, listed in dollars. For a European or Asian institutional investor to buy SPCX, they need to convert their local currency into dollars. That strengthens the dollar further, which hurts their own export competitiveness. Lucas: Exactly. So the IPO itself becomes a force that reinforces dollar strength. We've been talking about the strong dollar all year on this show. Episode 30, episode 35, episode 41 — it's a recurring theme. But a two-trillion-dollar add-on to US equity market cap is a structural shift. Luna: Let's talk about the buyers. Who actually got access to the IPO? SpaceX was heavily oversubscribed. Retail investors got a tiny piece. The big allocations went to institutional investors — many of whom are global funds. Lucas: Right. And some of those funds are sovereign wealth funds from the Middle East and Asia. For example, the Abu Dhabi Investment Authority and Singapore's GIC were reportedly in the pre ipo rounds. So capital that might have gone into emerging market infrastructure or European real estate is now sitting in SpaceX stock. Luna: It's a concentration of global savings into one company. That's risky. But it also signals a vote of confidence in the space economy. SpaceX's valuation implies that investors believe space will be a multi trillion dollar industry. Lucas: Absolutely. And that has ripple effects for other companies. If SpaceX can generate massive returns, more venture capital will flow into space startups globally. We might see a wave of space IPOs from Europe, Japan, India — all trying to replicate the model. Luna: But let's not forget the dark side. Emerging markets are already struggling with capital outflows. The Federal Reserve's tight monetary policy, the strong dollar, and now a mega IPO sucking up liquidity — it's a triple whammy. Countries like Argentina, Turkey, even India could see pressure on their currencies and bond markets. Lucas: Yeah. India's rupee trade initiative we covered in episode 32 was an attempt to de-dollarise trade. But with the dollar this strong, and SpaceX luring global capital, it's an uphill battle. The trade-weighted dollar index hit 120.1 just this week — that's near multi-decade highs. Luna: So what's the net effect on global capital flows? In the short term, money flows into US equities, out of emerging markets. In the long term, SpaceX's success could catalyse a whole new industry, attracting investment to space tech worldwide. Lucas: And that's where it gets interesting for cross-border M&A. We did episode 44 on how the strong dollar reshapes M&A. US companies become cheaper acquirers of foreign assets. Now with SpaceX as a potential acquirer or partner, we could see space-related deals across borders — maybe a European satellite manufacturer, a Japanese robotics firm. Luna: Musk has already talked about Starship enabling point to point travel on Earth. That's a direct challenge to airlines and logistics companies. If SpaceX starts offering cargo delivery anywhere in under an hour, global trade logistics changes completely. Lucas: Let's bring this back to the data. The US trade deficit narrowed slightly in April to $55.9 billion from $56.6 billion. Exports are up, imports are up. But the current account deficit improved to $190.7 billion from $239 billion. A stronger dollar typically widens the trade deficit by making imports cheaper and exports more expensive. But we're seeing the opposite — partly because of services exports like software and royalties. Luna: And SpaceX is a services exporter. It launches satellites for foreign governments, it provides Starlink internet globally. Those are service exports that show up in the trade balance. So SpaceX actually contributes to narrowing the deficit. Lucas: Good point. So the IPO isn't just a financial event — it's a real economic event with trade implications. And it's happening at a moment when the dollar is already strong, and global capital is already skewed toward US assets. Luna: Speaking of skewed capital flows, I think there's an interesting angle on how this affects foreign direct investment. Instead of building a factory in Mexico, maybe a company just buys SpaceX stock? That's portfolio investment, not FDI. Lucas: Right. FDI is about long-term control — building plants, hiring workers. Portfolio flows are more volatile. If global investors shift from FDI to buying SpaceX shares, that could reduce job creation in emerging markets. We saw that in episode 45 — FDI is bypassing the strong dollar by investing in US treasuries and equities rather than real assets abroad. Luna: So in a way, SpaceX is emblematic of a broader trend: the financialisation of global capital, where a single stock can absorb huge amounts of savings that might otherwise go into productive capacity in developing countries. Lucas: It's a concentration of economic power. And that comes with systemic risk. If SpaceX hits a regulatory or technical setback, the shockwaves would be global, not just US. Luna: At the same time, if you believe in the space economy, this is the most direct way to bet on it. For listeners who are investors, the question is: do you chase the momentum, or wait for a pullback? Lucas: And that's the kind of conversation we try to have on this show every day — practical, grounded, with real data. If these conversations have moved your work forward in some small way, a couple of dollars a month is genuinely what keeps these going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. Luna: Yeah, it really helps us stay independent and ad-free. We appreciate every bit of support. Lucas: Alright, back to SpaceX. One thing we haven't touched on is the regulatory angle. The IPO happened just days after the Trump administration hinted at a possible Iran deal. That geopolitical backdrop matters for space — Iran has been developing satellite tech, and any detente could open new markets. Luna: And let's not forget the competition. Jeff Bezos' Blue Origin, Richard Branson's Virgin Galactic — they're still private or smaller. But SpaceX's public valuation gives it a huge capital advantage. It can now use stock as currency for acquisitions. Lucas: Exactly. We could see SpaceX buying a European rocket maker or a satellite component supplier within the next year. That would be a new chapter in cross-border M&A, using a two-trillion-dollar stock as currency. Luna: So to wrap up: the SpaceX IPO is a landmark event that reshapes global capital flows, reinforces dollar dominance, and opens a new frontier for investment. But it also concentrates risk and diverts capital from emerging markets. Lucas: And as always, we'll be watching the data. The S&P 500 closed at 7,422 today, the Dow at 51,204. The Nasdaq slipped a bit — 25,862 — probably due to tech profit-taking. But the Russell 2000 jumped 3.5 percent, suggesting some rotation into small caps. The markets are adjusting to the new giant in their midst. Luna: It's a fascinating time. Thanks for joining us on International Business with Fexingo. We'll be back tomorrow with more. Lucas: Take care, everyone.