Report: Global Stock Markets Lost $25tn in 2022

•World Bank: Only 22% of Africa’s population accessed mobile internet services in 2021

Ndubuisi Francis in Abuja

A new data published by the World Federation of Exchanges (WFE), the global industry group for exchanges and central clearing counterparties has indicated that a total of $25 trillion was wiped off global stock markets in 2022.

The new WFE’s full year 2022 market highlights revealed that stock markets across the world declined by 20 per cent or $$25 trillion in market capitalisation and 10 per cent in value traded in 2022, interrupting the positive trend observed in the two previous years.

Global equity market capitalisation declined annually by approximately 20 per cent in 2022, with all regions declining significantly.

In absolute terms, this represented more than $25 trillion wiped off stock markets worldwide.

While trading value fell about 10 per cent globally in 2022, with trading value declining in every region, global volumes increased about five per cent with all regions contributing to this result.

The reference year also recorded the highest global volumes in the last six years (48.32 billion trades) and the highest regional volumes during the same period.

The Americas posted 13.44 billion trades, Asia and the Pacific (APAC) recorded 31.13 billion trades and the EMEA (Europe, the Middle East and Africa (EMEA) region, 3.74 billion trades).

The report also indicated that the number of initial public offerings (IPOs) and the capital raised through IPOs declined sharply compared to 2021 (-50 per cent and -65 per cent, respectively).

The number of exchange-traded derivatives contracts, including both options and futures, reached their highest level in the last six years, amounting to 56.17 billion for options and 29.59 billion for futures (84.76 billion derivatives contracts traded). This represented a 34.4 per cent increase compared to 2021.

Commodity derivatives were the only product line whose overall volumes (that is, considering both futures and options) declined in 2022 (-14.5 per cent), while equity, currency, and ETF derivatives volumes witnessed double digit increases (48.4 per cent, 48.2 per cent, and 36.9 per cent, respectively).

Interest rate derivatives volumes increased 8.5 per year-on-year.

According to the WFE, factors that caused last year’s slump included the aftermath of the Covid-19 pandemic which triggered inflationary trends.

This was fueled by strong consumer demand and supply bottlenecks exacerbated by the war in Ukraine and the sanctions against Russia, which increased energy prices, especially for European countries.

China’s renewed Covid-19 lockdown, with stringent measures enforced for most of the year, strained the global supply chain, increasing prices of imported goods. Investment cooled down in the equity market as a result of the high inflation environment, alongside the tightening of monetary policies which included raising interest rates across most economies.

Commenting on the report, WFE Chief Executive Officer, Nandini Sukumar said: “We witnessed a perfect storm in 2022 of so many negative pressures culminating to bring immense pressure on global stock markets, as our report highlights.”

Meanwhile, only 22 per cent of the population in sub-Saharan Africa had access to mobile internet services at the end of 2021, a report by the World Bank has revealed.

The lack of mobile internet access was hampering job creation and poverty reduction in the region, the report stated.

Titled, “Digital Africa: Technological Transformation for Jobs,” the report stated that despite the increased connectivity of the world, there were still significant gaps in access to technology.

 The report highlighted the largest gap between the availability of digital infrastructure and people’s actual usage in sub-Saharan Africa compared to all other regions in the world.

According to the report, African countries are in critical need to increase the uptake of digital technologies to drive employment growth and reduce poverty.

It revealed that on average, 84 per cent of a given country’s population had at least some level of 3G mobile internet availability, and 63 per cent had some level of 4G mobile internet services.

However, only 22 per cent of the population used mobile internet services by the end of 2021.

This disparity in usage rates ranges from six per cent in South Sudan to 53 per cent in South Africa, demonstrating the need for differentiated policy reforms across countries.

The report emphasised the critical need for African countries to increase the uptake of digital technologies to drive employment growth for the more than 22 million Africans joining the workforce each year.

Africa’s share of the global workforce was projected to become the largest in the world by 2100, making it vital to increase the uptake of digital technologies to create jobs and reduce poverty.