The various geopolitical and economic tensions that markets experienced during the first half of 2023 have hampered hopes of a faster economic recovery, according to the World Federation of Exchanges (WFE), a global industry group for exchanges and central clearing counterparties.
The WFE’s recent report, H1 2023 Market Highlights, highlights a decrease in the global number of initial public offerings (IPOs) and in investment flows compared to the same period in 2022. Only a few markets, notably the US, bucked the trend.
Its research found that global equity market capitalisation increased by 7.5% in the first half of 2023 compared to the end of the second half of 2022, representing a growth of more than $7.8tn in the global markets. This upward trend was driven by increases in the Americas and Europe, the Middle East and Africa (EMEA) regions, whereas Asia-Pacific experienced almost no change.
However, with respect to the first half of 2022, the value of shares traded and traded volumes globally decreased 20.9% and 13.9%, respectively, with declines across all regions.
Additionally, the number of IPOs and the capital raised through IPOs fell significantly in the first half of this year — by 28.9% and 24.1%, respectively — compared to the second half of last year.
The only region which recorded an increase in the number of IPOs and capital raised with respect to the second half of 2022 was the Americas, with a 40% increase in number of IPOs and a 340% growth in capital raised.
Markets in the Americas region hosted 63 IPOs in the first half of 2023, raising $8.96bn, with an average IPO size of $142.14m. Both Nasdaq (which hosted 48 IPOs, raising $2.61bn) and NYSE (13 IPOs, raising $6.23bn) saw good performance.
Asia-Pacific exchanges, on the other hand, opened their doors to 349 IPOs in the first half of 2023, raising $37.28bn, with an average of $106.81m per IPO. EMEA markets welcomed 102 IPOs in the first half of this year, raising $7.77bn, with an average of $76.2m per IPO.
Interestingly, the number of exchange-traded derivatives, or ETD, contracts continued their double-digit growth in the first half of 2023 to reach more than 56 billion. This has been an established trend since the second half of 2019. In the first half of this year, options contracts increased by 38.2% when compared to the second half of 2022, while futures contracts by declined 8.1%.
Currency derivatives — both futures and options — were the only derivative product whose overall volumes declined in the first half of 2023, by 14.3%. Equity and interest rates derivatives volumes, on the other hand, recorded jumps of 31.3% and 23.8%, respectively.
Nandini Sukumar, WFE’s chief executive, believes that all eyes will be on the direction of inflation in the second half of this year. “A decline in inflationary pressures, coupled with a decrease in monetary policy tightening, would lessen the trends we saw in the first half [and] we would anticipate more confidence in markets,” he stated.
Joy Macknight is editor of The Banker. Follow her on X (formerly known as Twitter) @joymacknight
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