Econintersect: There is an indication of asset deflation on a global scale that has not been widely reported. The latest data from WFE (World Federation of Exchanges) shows that global market capitalization for April 2012 declined by 0.5% from March and 11.7% from April 2011. For the year 2011 the global capitalization for the 50 markets tracked by WFE declined by 13.6%. There was a rebound of 9.7% from that big decline during the first four months of 2012. The decline from March to April was the first in 2012 following three consecutive gains. With many markets suffering significant declines in May the possibility exists that the gains for the entire year could be wiped out in one month.
The big losers on global exchanges for 2012 have been the exchanges themselves: Trading volume is down 19% for the year through April, according to the WFE.
Looking at the data for last year, 46 of the 50 markets tracked by WHE had loss of capitalization. The only worst year since the turn of the century was 2008 when 48 of 50 markets lost capitalization and the global decline was nearly 48%.
Some of the summary information the WFE reported for global equity markets for the year 2011 included:
- Equity volumes remained stable
- Market capitalization decreased by 13.6% to $47 trillion
- Derivatives, bonds, ETFs, and securitized derivatives al grew significantly.Total turnover value remained stable in 2011 at $63 trillion.
The largest capitalization losses for 2011 came from India (-38%), Egypt (--43%), Athens (-50%) and Cyprus (-58%). The four of the 52 exchanges which managed a capitalization increase: Mauritius (2%), Philippines ((5%), Indonesia (8%) and Ireland (80%). That is not a typo: the more precise number for Ireland is 79.6%.
Here is the press release from the WFE announcing the 2011 annual report:
Equity volumes in 2011 remained stable despite a fall in market capitalization, while derivatives, bonds, ETFs, and securitized derivatives continued to grow strongly, according to figures released today by the World Federation of Exchanges (WFE).
WFE statistics are culled from WFE member exchanges, which continued to increase their listings and diversify their product offerings in 2011. Specific 2011 highlights from WFE are as follows:
A 13.6% decrease brings global equity market capitalization to roughly the same level ($US 47 trillion) as it stood at the end of 2009. Almost all WFE members were affected by the decline, as only four exchange ended 2011 at a higher level. The magnitude of the decline was similar among the three time zones in dollar terms: -15.9% in the Asia-Pacific, -15.2% in EAME, and -10.8% in the Americas.
Despite the market capitalization decline, Electronic Order Book (EOB) turnover value remained stable at $US 63,080 billion (-0.1%). This figure was heavily influenced by the two largest exchanges by turnover value (NYSE Euronext (US) and NASDAQ OMX US), which represented almost 50% of the total EOB value of share trading.
The number of listings among WFE members increased slightly to 45,953 (+1.7%), in spite of an overall unfavorable macroeconomic environment for primary markets in several regions. The number of EOB trades totaled 112 billion, down 6.4% from the previous year, while the average transaction size was $US 8,700, up 1.8% from the previous year. The latter figure is not surprising given a stable value of share trading and a declining number of trades.
The number of on-exchange futures and options contracts traded in 2011 increased by 8.9% to 18.5 billion. Increased trading in stock index options and futures and ETF options led the gains, as high volatility and uncertainty over the sovereign debt crisis continued to increase risk management needs.
Bonds, ETFs and Securitized Derivatives
Bond trading on exchanges increased sharply in 2011, up 35.5% to $US 32.5 trillion, reflecting the growing interest for fixed-income products as well as the security and transparency of the exchange offer.
The 2011 ETF turnover value was $US 10.3 trillion (+7.5%) and the number of listings totaled 6,909 (+24%). The Americas region still dominated this segment (87% of the total volumes), but the two other regions were continuing to catch up with higher growth rates.
Securitized derivatives grew by 51% to 1.1 million, mostly due to a surge in listings in the EAME region where turnover value was also significantly up (+23%). Overall volumes are nearly stable (+2%, $US 1.1 trillion), as the Asia-Pacific region still dominates volume figures (77% of overall total).
To view and/or download WFE monthly statistics, please visit http://www.world-exchanges.org/statistics
ABOUT THE WFE:
The World Federation of Exchanges is the trade association for the operators of regulated financial exchanges. With 54 members from around the globe, the WFE develops and promotes standards in markets, supporting reform in the regulation of OTC derivatives markets, international cooperation and coordination among regulators. WFE exchanges are home to more than 45,000 listed companies.
- May Flash Stats: Xetra Down 27%, CBOE, Eurex Gain (Tom Steinert-Threlkeld, Securities Technology Monitor, 4 June 2012)