Global Capital Markets Post $18trn Half-year Losses

Ndubuisi Francis in Abuja

New data published by the World Federation of Exchanges (WFE), the global industry group for stock exchanges and central clearing counterparties has shown that the world capital markets posted a total of $18 trillion losses in the first six months of 2022 triggered by the Russia-Ukraine war and the lingering impact of COVID-19.

However, despite the setback from both challenges which slowed down the global economy, Nigeria’s capital market activities ended positively in the first half (H1) of 2022 as both local and foreign investors on the Nigerian Exchange Limited (NGX) gained about N3 trillion, although the volume of stocks traded declined by 19.03 per cent.

According to the WFE’s Market Highlights report for the first half of 2022, there was a sharp retraction in market capitalisation of around 15 per cent globally when compared with the previous six-month period, with all global regions experiencing decreases of similar proportions.

This culminated in over $18 trillion being wiped off global markets in the first six months of 2022.

The number of Initial Public Offerings (IPOs) plunged 52 per cent over the same time period as the capital raised through IPOs fell by 62 per cent.

However, it was not all gloom. There were some glimmers of hope as trading activity in cash equities increased in the Americas and in Europe, the Middle East and Africa (EMEA) region, during the period, by 26 per cent (the Americas) and 16 per cent (EMEA).

Value traded increased by 17 per cent and 13 per cent respectively compared with the last six months of 2021.

In the Asia Pacific region (APAC), the number of trades decreased marginally by 2.98 per cent but the value traded decreased by around 23 per cent.

The WFE report also revealed that the number of exchange-traded derivatives contracts reached its peak level in the last five years, totaling $39.37 billion – an increase of 17.2 per cent on figures from the second half of 2021.

The Chief Executive Officer at the WFE, Nandini Sukumar said: “Growth prospects were already subdued as the tragic Ukraine conflict caused major disruption in the energy and commodity markets.

“This combined with global economies already struggling to recover from the pandemic has led to a perfect storm that has hit growth prospects hard.”

Also, the Head of Research at the WFE, Dr Pedro Gurrola-Perez said: “Our new data indicates a severe market capitalisation retraction, a decrease in the number of newly listed companies, and a decline in the investment flows through IPOs.

“While this report does indicate extreme uncertainty, it is important to note that trading activity in cash equities increased and, overall, volumes in exchange-traded derivatives rose.”