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17 Dec 2018

Recent Developments in European Capital Markets

Key findings from the 2018 ECMI Statistical Package

Love Gleisner / Apostolos Thomadakis

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European Capital Markets Institute, Research Report No. 14

At the time of drafting this report, Love Gleisner was a Research Trainee at ECMI, and Apostolos Thomadakis, Ph.D. is a Researcher at ECMI.

This paper provides an overview of the key findings observed in the 2018 ECMI Statistical Package, a comprehensive and annually updated database on the dynamics of European and global capital markets (covering the US, Japan, China and other relevant markets).* The key trends obtained from the Package on equity markets, debt securities, exchange-traded derivatives, over-the-counter derivatives and asset management are outlined in this report.

                                                                          Key Highlights

Equity

  • European market capitalisation increased by 11.3% in 2017.
  • Number of listed companies on European exchanges displayed positive growth for the first time in seven years and IPO investment flows grew by 37.9%.
  • Number of ETF listings on European exchanges grew in 2017 but the value of ETF trading declined by 12.8%.

Debt securities

  • Notional amounts of outstanding debt in EU28 grew both in terms of value and share of GDP.
  • Notional amounts of debt issued by non-financial corporations continued to grow, signalling a change in financing strategies among EU28 businesses.
  • Outstanding volumes of covered bonds continued to decline, predominantly driven by declining amounts of public sector bonds.
  • Usage of CDOs as collateral for securitisation issuance grew in 2017 while aggregate issuance declined.

Exchange-traded derivatives

  • European markets exhibited overall growth with turnover on interest rate futures being up by 29.9% in 2017.
  • Global trading in commodity derivatives, unlike interest rate derivatives, saw its first year-on-year decline since 2011.
  • Strong growth in trading of equity derivatives in emerging markets.

Over-the-counter derivatives

  • Strong appetite for short-term instruments and interest rate derivatives (IRD) contracts in global over-the-counter (OTC) trading.
  • Gross market value of dollar-denominated IRD contracts declined to lowest level since the financial crisis.
  • Central clearing continues to make inroads for IRD contracts.

Investment and mutual funds

  • Net assets of European investment funds reached an all-time high of €14.9 trillion in 2017.
  • Net assets of alternative investment funds (AIF) saw its ninth consecutive year of growth.
  • Growth for UK investment funds recovered following the aftermath of the 2016 referendum.

* The ECMI Statistical Package retrieves, compiles and analyses data from publicly available sources and reports as follows: Section 1: WFE, FESE and trading venues; Section 2: BIS, ECB, ECBC, AFME, WFE, FESE and trading venues; Section 3: BIS, WFE, FESE and trading venues; Section 4: BIS and WFE; Section 5: EFAMA, OECD, Pensions Europe and Insurance Europe; Section 6 to 8: Eurostat, IMF and World Bank.

Information on the 2018 ECMI Statistical Package and how to download it can be found here.