NO 251 – JANUARY 2014

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WFE Focus
2013 WFE MARKET HIGHLIGHTS
GREGOIRE NAACKE
Senior Analyst,
WFE

For the second consecutive year, equity markets experienced a relatively good performance in 2013. Indeed, the global market capitalization of WFE members increased by 17% (against 15% in 2012). In that positive context, investment flows activity recovered after two years of significant decrease and the volume of Exchange Traded Derivatives also increased again after the sharp decline observed in 2012.

In Americas and Europe Africa Middle East, the good performance of market capitalization was not accompanied by a significant increase of trading volumes, but in Asia Pacific trading volumes surged by 47% in local currency terms.

Equity Markets

Market capitalization USD 64 tn +17%

In 2013, the global market capitalization continued to increase significantly with a 17% growth rate to USD 64 195 billion. It reached again the level observed during the first part of 2008 before Lehman Brothers bankruptcy.

Americas and EAME regions experienced similar growth rates (+22%), whereas the increase was less pronounced for Asia Pacific region (+7%). In the Americas, the growth was mainly driven by the US exchanges that increased 29% while Canada increased slightly less (+10% in local currency) and Latin American Exchanges decreased by 13% in USD and by 4% in local currency.

In Asia-Pacific, the highest growth rates in local currency terms were observed in Japan (+50%), Taiwan (+16%), Malaysia (+15%) and Hong Kong (+10%). The relative lower performance of Asia Pacific region compared to Americas and EAME could be partly explained by currency effects. Excluding currency effects, the growth rate for the region would have been +16% instead of +7%.

In EAME, Europe increased 23% (+19% in local currency terms) while Africa and Middle East rose 13% (+26% in local currency terms).

Value of share trading: USD 55 tn +12%

Contrasted trends were observed for the value of share trading. Despite the good performance of market capitalization in 2013, Electronic Order Book (EOB) turnover value only increased by 1% in local currency terms in both Americas and EAME regions, whereas volumes surged (+47% in local currency terms) in Asia Pacific region.

Number of EOB trades: 10 452 mn +7%

Average value of trades: USD 8 661 +7%

The global increase of number of trades (+7%) was less pronounced than for the value of share trading (+12%). As a direct result, the average transaction size (weighted by value of share trading) increased in 2013 in all the regions (+7%). Though we are lacking more detailed figures, this could be an indication of the slowdown in activity of algorithmic trading (including HFT). The average transaction size in Asia Pacific is still below the WFE average indicating an active retail market.

Number of IPOs:  1 128 +2%

After two years of significant decrease, the total number of IPOs increased again (+2%) in 2013 and investment flows through IPOs increased sharply (+34%).

In 2013, the global market capitalization continued to increase significantly with a 17% growth rate to USD 64 195 billion.

Derivatives1

Number of contracts traded 19.5 bn +1%

After a negative year in 2012 for ETD (volumes declined by 15%), the number of derivatives traded on-exchange rose again in 2013 (+6.4% excluding KOSPI 200 options).

The number of equity derivatives traded decreased by 4.3%, mainly due to the sharp decrease of number of index options traded on Korea Exchange following the multiplication by five of the size of the newly listed contracts on KOSPI 200 since March 2012. Excluding Korean index options, global equity derivatives increased by 4.5%. And the overall derivative volumes increased +6.4%.

The volume of Interest Rate options and futures traded slightly recovered (+1.5%) while commodity derivatives experienced the highest increase (+20.5%).

Currency derivatives, which had been most severely, harmed products in 2012, increased by 3.7% in 2013.

Other products

Bonds (cash markets)

Turnover value: USD 22.4 tn -15%

Bonds trading continued to decline in 2013 (-15% against -20% in 2012). The decrease was driven by Europe Africa Middle East region, where 86% of the exchange traded volumes are concentrated.

ETFs

Turnover value: USD 11.9 tn +11%

Listings: 8 143 +5%

The turnover recovered in 2013 (+11%) after the sharp decrease (-31.6%) realized in 2012. The increase was mainly due to the United States performance (+69%) which represents 87% of the WFE total turnover.

Securitized derivatives

Turnover value: USD 632 bn -3%

Listings: 1 421 229 +12.5%

Securitized derivatives listings continued to grow significantly (+12.5%), but overall volumes decreased (-3%).

The figures presented here only cover the monthly statistics collected by WFE. The annual IOMA survey will provide more details on derivatives markets and offer more complete statistics on these products.