London, 7 May 2020 – The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has today published its First Quarter 2020 & Full Year 2019 Market Highlights Report.
In the report, we have placed the WFE’s full-year statistics side by side with the statistics for Q1 2020, with the aim of helping to better understand the intensity of the shock the global economy has experienced over the last quarter, and the challenges that markets have faced.
More than 18 trillion USD globally were wiped out by the COVID-19 crisis over the course of February and March 2020. But, even in such a difficult time, markets kept playing their role, facilitating the transfer of funds in the real economy. In the first quarter of 2020, the global number of IPOs and the amount of capital raised significantly increased from the first quarter of 2019. Even in March, the most affected month of the quarter, we still saw more than 70 IPOs worldwide, raising more than 9 USD billion in capital.
Global stock markets started 2019 against the backdrop of low market capitalisation figures in 2018. As the year unfolded, however, the fears of a global economic slowdown receded, and geopolitical and trade tensions showed some respite. By the end of the 2019, most indicators were positive: domestic market capitalisation reached record high levels in markets across the globe, and investment flows through IPOs substantially increased. On the downside, there were significant declines in new listings through IPOs.
While some of the positive indicators in 2019 are partly a result of having started the year at a low base, they are also a consequence of specific events, like Saudi Aramco’s Initial Public Offering (IPO), the lowering of interest rates by the US Federal Reserve, and some large IPOs in the technology sector, including Pinterest.
Exchange traded derivatives volumes reached record volumes in 2019, with only currency futures showing a decline when compared with 2018.
KEY HIGHLIGHTS Q1 2020 & FY 2019:
Global domestic market capitalisation in 2019 was up 25.58% relative to end-2018. All three regions enjoyed an increase in market capitalisation: the Americas up 19.44%, Asia-Pacific up 30.0%, and EMEA up 31.9%.
At the end of Q1 2020, domestic market capitalisation amounted to 73.14 trillion USD, a 13.61% decrease when compared to Q1 2019. All regions were equally affected: the Americas region lost 17.28% of its value, the Asia-Pacific region 12.76%, and the EMEA region 7.11%. The move was even more marked compared to Q4 2019: Global decrease: -20.75%; Americas: -22.18%; Asia-Pacific: 17.48%; EMEA: -22.79%).
In 2019: the value of trades in equity shares was down 7.7% but the number of trades was up 13.0% when compared with 2018, the contrast explained by regional trends. For value traded, Asia-Pacific’s uptick of 10.9% was not large enough to outpace the downtick in both the Americas (-15.37%) and EMEA (-15.3%); and for number of trades, Asia-Pacific’s increase of 23.3% versus the Americas down 1.7% and EMEA also down 2.7%, was enough to drive a global positive trend.
As of end of Q1 2020: the value of trades in equities amounted to 32.5 trillion USD, an increase of 36.13% globally when compared to Q1 2019. All regions were positive: the Americas region saw a 42.29% increase, the Asia-Pacific region a 25.97% uptick, and the EMEA region a 42.16% increase as compared to Q1 2019
In 2019 new listings through IPOs were down 25% but investment flows through IPOs were up 12.2% on 2018. The combination of the decrease in the number of IPOs and the increase in the amount of funds raised suggests that companies going to market over the course of 2019 were, on average, larger in size: indeed, average investment flow per listing in 2019 was 166.2 million USD, as opposed to 113 million USD in 2018.
In Q1 2020: a total of 225 new companies listed on stock markets through IPO. The number of IPOs was 6.9% larger than in Q1 2019, though 53.97% lower to Q4 2019. Despite the COVID-19 outbreak, February and March 2020 did not see a plunge in the number of IPOs: 74 companies listed through IPO in February 2020, and 73 in March. These figures are comparable to and even higher than several 2019 monthly figures.
Nandini Sukumar, Chief Executive Officer, the WFE said: “Markets have remained open, supporting the economy during this crisis. The industry’s long running commitment and investment in business continuity planning has enabled markets to provide funding solutions for those who need it, risk mitigation and management for those who need it and for investors to take a view on the economy and on growth. As an industry we look forward to helping rebuild the global economy.”
Pedro Gurrola-Perez, Head of Research, the WFE said: “To better assess the impact of the economic shock of Covid-19 on markets across the globe, we have produced a report that brings together the highlights of 2019 with an update of the first quarter of 2020. When looking at the data, one cannot overstate the fact that, even during the worst days of the crisis, markets remained resilient and continued facilitating the transfer of funds in the real economy.”
Please click here to read the full Market Highlights Report
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About the World Federation of Exchanges (WFE):
Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 35% are in Asia-Pacific, 45% in EMEA and 20% in the Americas. WFE’s 57 member CCPs collectively ensure that risk takers post some $800bn (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. WFE exchanges are home to nearly 53,000 listed companies, and the market capitalisation of these entities is over $93 trillion; around $88 trillion (EOB) in trading annually passes through WFE members (at end 2019).
The WFE is the definitive source for exchange-traded statistics, and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years, and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.
With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.