Global market capitalisation recorded $109.21 trillion for the financial year ended 2020, according to report obtained from the World Federation of Exchanges (WFE).
The full year 2020 market highlights showed that after a sharp drop (20.7 per cent) in Q1, domestic market capitalisation quickly recovered, reaching prepandemic levels by the end of Q2. In November 2020, global market capitalisation passed the $100 trillion mark for the first time, ending the year at $109.21 trillion, up 19.7 per cent when com pared with the end of 2019.
While there was an overall 1.1 per cent increase in the number of listed companies relative to 2019, EMEA accumulated three consecutive years with a contracting trend. In 2020, equity markets saw record-high levels of value traded (53.7 per cent) and volumes (56.0 per cent) compared with the previous year.
After reaching a peak in March, higher value-traded and volumes became the new normal, persisting through the year: in Q4, the number of trades stood at 9.54 billion and the value of trades amounted to $34.81 trillion. When compared with 2019, the number of new listings through IPOs and investment flows through IPOs increased significantly, by 25.7 per cent and 36.8 per cent respectively.
There was a 1.1 per cent increase in the number of listed companies. Derivatives trading rose for almost all contract types and in all regions. Options trading increased more than futures trading.
Overall, in 2020, exchange traded derivatives volumes were up 43.0 per cent when compared with 2019, reaching a record 46.28 billion contracts traded. In 2020, ETDs saw significant increases in volumes, mainly in single stock futures (99.5 per cent) and ETF options (77.6 per cent), the former being driven by the Americas (1,202.0 per cent), in particular by B3-Brasil Bolsa Balcão.
The report offered the first opportunity to study the impact of the events of 2020 on markets holistically and looks across market capitalisation, listed companies, IPOs, volumes and value traded in multiple assets classes including equities, derivatives futures, options and ETFs.
The year 2020 was an extraordinary year in history, with COVID-19, the U.S. presidential election, Brexit, the resignation of Japan’s Prime Minister Shinzo Abe and increased tension between U.S. and China creating vast economic uncertainty and a flood of pessimistic forecasts. In March, we saw market volatility levels comparable only to those of the Great Financial Crisis of 2008.
What is remarkable is that markets remained open and functioning, despite the exceptional circumstances and even during the worst days of the crisis. In addition, after the peak in uncertainty observed in March, markets quickly recovered.
By the end of July, most indicators registered a quick reversal to the activity levels seen before the pandemic, reflecting a strong confidence in the markets and in their role in supporting the economy.