Markets prove their mettle last year despite pandemic

Nandini Sukumar, CEO, WFE.

It was a busy time for stock exchanges last year, but they have ‘swiftly’ recovered amid the disruption caused by Covid-19, according to the year end report card from The World Federation of Exchanges (WFE).

They also coped well with the other major events of 2020 including the US presidential election, Brexit, the resignation of Japan’s prime minister Shinzo Abe and increased tension between the US and China.

WFE’s report focuses on the impact of the events on markets holistically and looks across market capitalisation, listed companies, initial public offerings (IPOs), volumes and value traded in multiple assets classes including equities, derivatives futures, options and exchange-traded funds (ETFs).

The report shows that there was a of 25.7% hike in new listings through IPOs compared to 2019. In the fourth quarter, they significantly increased by 36.4% while the average size rose to around $187.1m from $171.9m in 2019.

The report notes that despite a sharp drop of 20.7% in the first quarter last year, domestic market capitalisation in the equity markets quickly recovered, reaching pre-pandemic levels in the following months.

The report also reveals that in November 2020, markets added $10.90 trn, surpassing the $100 trn mark for the first time. At the end of last year, market capitalisation was up by 19.7% to $109.2 trn over the year before.

Looking at exchange-traded derivatives (ETDs), trading rose for almost all contract types, and in all regions. Drilling down, options trading outpaced futures trading.

Overall, in 2020, ETD volumes jumped 43% versus 2019, reaching a record of 46.28 billion contracts traded.

Last year, ETDs saw significant increases in volumes,  in single stock futures (99.5%) and ETF options (77.6%), the former being driven by the Americas (1,202%), most notably by B3-Brasil Bolsa Balcão.

Nandini Sukumar, CEO of the WFE, says, “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 at the WFE, adds: “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.”

©BestExecution 2021

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