According to its recent Market Highlights Report, there has been increased investor interest in listed securities this year, the World Federation of Exchanges (WFE) has stated. Figures have been boosted by high market liquidity and strong volatility driven by economic and geopolitical uncertainty, it added.
Equity trading value was up 9.71% year-on-year in H1 2024, with trading volumes up by 18.25%. This marks the highest number of trades in a half-year over the past five years, according to the World Federation of Exchanges’ (WFE) market highlights report.
Compared to H2 2023, equity trading value and volumes were up 11.7% and 9.6% respectively.
Pedro Gurrola-Perez, head of research at the WFE, commented that “For the second half of the year a decline in inflationary pressures and an ease in monetary policy may support the positive trends we observed in H1 2024.”
However, he added, “The persistent geopolitical tensions, a potential slowdown in the U.S. economy coupled with the uncertainty derived from the US election, could inhibit market growth. If that’s the case, it will be hard on companies looking for capital, investors looking for attractive assets and savers looking to maximise their savings.”
Speaking to Global Trading about the potential impact of the US election, Gurrola-Perez said: “The US counts for almost half of the global market cap so it has a significant impact on the global trend. Whichever way the election falls, what we want to see from any government is a willingness to support their local markets – this will have a much longer-term impact on the market than any initial investor reaction, and it’s true of the largest economies like the US through to emerging markets. Governments need to partner with their exchanges, as a vital source of growth for their economies.”
More broadly, he suggested, “an increase in tensions in the Middle East or Ukraine can impact markets and increase volatility in the short-term, as we have seen play out, but over the longer-term shares have a proven ability to bounce back.”
“The data we have published today shows that, during times of uncertainty, investors are turning to markets as a stabilizing force, a way to balance their investments and hedge against uncertainty, so we expect the growth in investor participation, including in the derivatives market, to continue.”
Global equity market capitalisation hit US$116.16 trillion in H1 2024 – up 5% from the previous half (HoH) – and added more than US$5 trillion to stock markets, the report found. This was driven by activity in the Americas, it stated, which recorded a 9.4% market growth, while APAC markets increased by 1.4% and EMEA markets remained flat.
Exchange-traded derivatives volumes rose both YoY and HoH (52.2% and 11.6%), reaching 85.04 billion contracts. Equity and interest rate derivatives volumes increased by 16.5% and 16.3% respectively HoH, reaching their highest levels in five years. ETF derivatives volumes rose by a more modest 6.8%, while currency and commodity derivatives volumes, in contrast, both fell – by 38.2% and 15.4% respectively.
The number of IPOs dropped significantly in Europe over H1, the report continued, falling by 31.7% from H2 2023. APAC saw a similar decline of 30.8%, while in the Americas the figure rose by 36.4%. Globally, a 24.2% decline was recorded, with 501 IPOs hosted. These figures were less drastic year-on-year (YoY), falling by 8.7% globally.
Capital raised through IPOs declined in tandem, down 10% HoH and 17% YoY. Despite strong performances in the Americas and EMEA, with capital up 97.1% and 121.4% respectively on the previous half and up 89.2% and 86% respectively YoY, APAC dragged global figures down as it saw its lowest levels in the last five years.
More positively, however, the average size of an IPO jumped by 18.8% HoH, the report found. This was due in part to seven unicorn listings over H1 2024.
Gurrola-Perez assured Global Trading that “the data we have published today should give businesses comfort that the investors are here and there is a strong appetite for listed stocks. This is one side of the equation; the other is policy. If we are to see a recovery in IPOs, we need to see governments and regulators to implement policy incentives to encourage businesses to list. Without this, IPOs will continue to decline and the whole financial ecosystem will suffer.”
Commenting on the report’s findings, Nandini Sukumar, CEO of the WFE, said: “Investor demand for exchange-traded securities continued to grow, reflecting the fundamental stability of public markets in times of uncertainty. The data shows that investors are here and are looking for capital allocation opportunities. Exchanges call on governments and regulators to pull the necessary policy levers to encourage businesses to float and benefit from public finance. Without a strong pipeline of companies coming to market, the whole economy suffers.”
©Markets Media Europe 2024
