Global Market Capitalisation Passed $100 Trillion
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has today published its Full Year 2020 Market Highlights Report.
The report offers the first opportunity to study the impact of the events of 2020 on markets holistically and looks across market capitalisation, listed companies, IPOs, volumes and value traded in multiple assets classes including equities, derivatives futures, options and ETFs.
2020 was an extraordinary year in history, with the Covid-19 pandemic, the US presidential election, Brexit, the resignation of Japan’s prime minister Shinzo Abe and increased tension between the US and China creating vast economic uncertainty and a flood of pessimistic forecasts. In March we saw market volatility levels comparable only to those of the Great Financial Crisis of 2008.
What is remarkable is that markets remained open and functioning, despite the exceptional circumstances and even during the worst days of the crisis. In addition, after the peak in uncertainty observed in March, markets quickly recovered. By the end of July, most indicators registered a quick reversal to the activity levels seen before the pandemic, reflecting a strong confidence in the markets and in their role in supporting the economy.
Towards the end of the year, the news of the development and approval of several Covid-19 vaccines, the final agreement between the UK and the EU, and the outcome of the US elections seemed to have boosted the confidence of investors and issuers, driving markets to end the year on a high note.
Nandini Sukumar, Chief Executive Officer, the WFE said: “These numbers reflect how exchanges have continued to play an active and fundamental role in supporting their underlying economies even during this unprecedented year. While 2021 will remain volatile, and much remains unknown about how and when we will find our way through the pandemic, public markets remain open for those who need them, stand ready to finance inclusive growth and support those who seek to mitigate risk.’’
Dr Pedro Gurrola-Perez, Head of Research, the WFE said: “At a time when many economic indicators are struggling to overcome the impact of the 2020 events, it is encouraging to see how swiftly market activity has recovered, reflecting a strong confidence in the markets and reaffirming the importance of their role in rebuilding the economies”
- After a sharp drop (20.7%) in Q1, domestic market capitalisation quickly recovered, reaching pre-pandemic levels by the end of Q2.
- In November 2020, global market capitalisation passed the 100 USD trillion mark for the first time, ending the year at 109.21 USD trillion, up 19.7% when compared with the end of 2019.
- While there was an overall 1.1% increase in the number of listed companies relative to 2019, EMEA accumulated three consecutive years with a contracting trend.
- In 2020, equity markets saw record-high levels of value traded (53.7%) and volumes (56.0%) compared with the previous year.
- After reaching a peak in March, higher value-traded and volumes became the new normal, persisting through the year: in Q4, the number of trades stood at 9.54 billion and the value of trades amounted to 34.81 USD trillion.
- When compared with 2019, the number of new listings through IPOs and investment flows through IPOs increased significantly, by 25.7% and 36.8% respectively. There was a 1.1% increase in the number of listed companies.
Exchange traded derivatives (ETDs)
- Derivatives trading rose for almost all contract types, and in all regions. Options trading increased more than futures trading. Overall, in 2020, exchange traded derivatives volumes were up 43.0% when compared with 2019, reaching a record 46.28 billion contracts traded.
- In 2020, ETDs saw significant increases in volumes, mainly in single stock futures (99.5%) and ETF options (77.6%), the former being driven by the Americas (1,202.0%), in particular by B3-Brasil Bolsa Balcão.
The offering makes it simple for firms to track their sustainable derivatives positions.
Phase 5 of the uncleared margin rules (UMR) took effect from September 2021.
A number of Libor rates will cease to exist at the end of this year.
Pension funds in Asia have significantly increased their international exposure.
Temporary equivalence is set to expire on June 30 2022.