WFE Research Team , London , World Federation of Exchanges | Mar 2018

 

In February 2018, stock markets across the globe experienced a significant correction after an upbeat start to the year in January, and market volatility surged, ending the relatively calm spell observed over 2017.

Benchmark indices across the world fell – to name a few, in the Americas the DJIA and S&P 500 plunged by over 10% and Argentina’s Merval Index dropped by 16%. In Asia-Pacific region, the Hang Seng, Shanghai Composite Index and Nikkei lost 13%, 14.6% and 12.6% respectively, while in the EMEA region the Dax 30 lost 11.7%, the FTSE index was down by 4.7% and the JSE’s All-Share index was down by 11%. News of higher wage growth, higher commodity prices, rising bond yields and expectations of a faster than anticipated tightening of monetary policies worldwide are deemed to be among the triggers of this market correction.

Domestic Market Capitalisation (Trillion USD)

In this article we analyse the trends in market valuation, measured by domestic market capitalisation against his backdrop.

  • In February 2018, for the first time since the beginning of 2017, we saw a month-on-month decline (2.5%) in domestic market capitalisation in all three regions, a reversal from the trend of a steady increase in global market capitalisation that started in October 2016.

  • 55 of the 69 stock markets under review recorded a drop in the market capitalisation in February 2018 when compared to January 2018. The few exceptions to this trend were emerging economies that, against the global trend, recorded a 1 to 4% increase in market cap.

  • The overall drop in market cap was due to a 4.2% and 4.9% decline in the Asia-Pacific and EMEA regions respectively with respect to January 2018. Despite the significant drop in benchmark indices in the Americas during the month, the overall market cap as at end February 2018 was slightly up (+0.2%) on January 2018, almost entirely driven by an uptick in the market cap of NYSE (up 2.3% on January 2018).

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