During the first half of 2023, markets continued to be subject to various geo-political and economic tensions that have hampered the expectations of a quicker economic recovery. In addition to the effects of the war of aggression against Ukraine, we saw the failure of some banks in Europe and in the U.S., which at some point raised fears of financial institutions running into difficulty at a larger scale. The persistent inflation has forced central banks to continue tightening their monetary policy. In turn, the increase in interest rates has put pressure on share prices.
The data we present in this summary for the first half of 2023 reflect how these tensions have affected markets. Most significantly, we see a decrease in the global number of IPOs and in investment flows, which respectively fell 27% and 53.4% when comparing to the same period in 2022. Only a few markets, notably the U.S., offered a positive trend. In a similar line, trading activity in the cash equities decreased across regions, reflecting lesser interest in participating in the markets. On the other hand, the need for managing the risks and the uncertainty derived from interest rate hikes, the geo-political landscape, and the fear of inflation are consistent with the increase in volumes of interest rate and commodity derivatives.
For the second half of the year, a decline of inflationary pressures and a slow-down in monetary policy tightening may contribute to moderate the above trends; still, global growth is projected by the IMF to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. Therefore, it will probably not be until the second part of 2024 when we will see a reversion in these trends.
