The The World Federation of Exchanges has announced that the global number of IPOs and trading of cash shares in parts of the world decreased in the first half of 2023 compared to the same period last year.
WFE, the global industry association for exchanges and central clearing counterparties, cited various geopolitical and economic tensions markets were experiencing in the first half of 2023 as the reason for the decline in a statement.
The association said the fallout from the war in Ukraine has left more financial institutions in trouble as bank failures were reported in Europe and the US
It also said persistent inflation was forcing central banks to further tighten monetary policy and the resulting rate hikes had put pressure on stock prices.
“Our data for the first half of 2023 reflects how these tensions have impacted markets. Most significantly, we are seeing a decline in global IPOs and investment flows in 2022 compared to the same period, suggesting that companies and investors remain cautious. Few markets, notably the US, showed a positive trend on these indicators.
“Similarly, trading activity in cash stocks declined across all regions, reflecting reduced interest in participating in the markets. “Conversely, we are seeing an increase in the volume of exchange-traded derivatives, particularly interest rate and commodity contracts, consistent with the need to manage the risks and uncertainties arising from rate hikes, the geopolitical landscape and fears of inflation.” read the statement.
Commenting on this development, WFE CEO Nandini Sukumar said: “The first half of the year was tough for the markets and the IMF’s expectations for global growth are for a slow recovery.” be directed towards inflation. A reduction in inflationary pressures coupled with less monetary tightening would weaken the trends we saw in the first half of the year as we would expect confidence in the markets to improve.”
The head of research at the WFE, Dr. Pedro Gurrola-Perez, added: “Our new data point to a slower than expected economic recovery as geopolitical and economic tensions have taken their toll. In particular, the decline in the number of IPOs and investment flows suggests that the uncertainty that companies and investors have faced over the past year is ongoing.”
Looking ahead to the second half of the year, the WFE said a fall in inflationary pressures and a slowdown in monetary tightening could help moderate the above trends.
However, the IMF continues to forecast that global growth will fall from an estimated 3.5 percent in 2022 to 3.0 percent in 2023 and 2024.
“If these projections are accurate, we believe it will probably not be until late 2024 before these trends reverse,” WFE concluded.
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