FY 2022 Market Highlights report

$25 Trillion Wiped Off Global Stock Markets in 2022, WFE Data Reveals

World Federation of Exchanges Report highlights factors: Inflation, Ukraine war and Covid lockdown in China

London, 17 March 2023 – New data published by the World Federation of Exchanges (WFE), the global industry group for exchanges and central clearing counterparties, indicates that $25 trillion was wiped off global stock markets in 2022.

WFE’s FY 2022 Market Highlights report reveals that stock markets declined by 20% in market capitalisation and 10% in value traded in 2022, interrupting the positive trend observed in the two previous years.

Factors that caused last year’s slump include the aftermath of the Covid-19 pandemic which caused inflationary trends fuelled 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 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.

Nandini Sukumar, Chief Executive Officer at the WFE, 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.”

There was some good news however, as volumes of exchange-traded derivatives continued a positive trend, with the exception of commodity derivatives. There was a pronounced increase in the case of options – possibly due to a greater need to hedge against market uncertainty.

Some highlights from the report:

Cash equity

Global equity market capitalisation declined annually by approximately 20% in 2022, with all regions declining significantly. In absolute terms, this represents more than $25 trillion wiped off stock markets worldwide.

While trading value fell about 10% globally in 2022, with trading value declining in every region, global volumes increased about 5%, with every region contributing to this result. 2022 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 (13.44 billion trades), APAC (31.13 billion trades) and the EMEA region (3.74 billion trades).

The number of IPOs and the capital raised through IPOs declined sharply compared to 2021 (-50% and -65%, respectively).

Exchange-traded derivatives

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 represents a 34.4% 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%), while equity, currency, and ETF derivatives volumes witnessed double digit increases (48.4%, 48.2%, and 36.9%, respectively).

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

Other products

While the number of listed exchange-traded funds (ETFs) increased only 5% when compared to 2021, the ETF value traded increased considerably (32.2%), due to increases in every region.

The number of listed securitised derivatives (SD) went slightly up year-on-year (2.6%), but the value traded declined year-on-year (-21.6%), due to declines in every region.

The number of listed investment funds (IF) fell year-on-year (-6.1%) while the value traded increased 12.5%. EMEA region recorded declines in both the number of listed investment funds and in value traded, while in the Americas both changes were positive. The APAC region recorded the largest drop in the number of listed funds and the largest increase in value traded.

You can download a copy of the report here.

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