Recent Developments in European Capital Markets – Key findings from the 2017 ECMI Statistical Package

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Apostolos Thomadakis, Robin Lechtenfeld

This report presents the key findings of the 2017 ECMI Statistical Package, a comprehensive database, compiled annually, of developments in European and global capital markets (US, Japan, China, etc.).* The Package aims to enable users to trace trends and illustrate the ongoing transformation of capital markets, including the structural changes brought about by competitive forces, innovation and regulation. The report follows the same structure as applied in the ECMI Statistical Package, and consists of five main sections: equity markets, debt securities, exchange-traded derivatives, over-the-counter derivatives and asset management (mutual funds). Information on the 2017 ECMI Statistical Package and how to download it can be found here.

Key Highlights

Equity markets

  • European market capitalisation was up by 1.4% in December 2016.
  • Despite the decline in the number of listed companies by 0.8%, the average capitalisation per listed company increased by 2.2%.
  • Value of share trading increased by 2.7% compared to 2015.
  • The value of investment flows (which includes IPOs and raising capital by listed companies) was down 5.9% at end-2016.

Debt securities

  • Total outstanding amount of debt securities in Europe decreased by 2.1%, driven mainly by a decline of 5.8% in the issuance of debt by financial institutions. 
  • Outstanding volumes of covered bonds remained stable at €2.2 trillion, while issuance volumes declined by 11.3%, reaching €0.4 billion at end-2016.
  • Denmark and Germany are the largest markets, both in terms of outstanding and new issuance volumes.
  • The market is heavily focused on mortgages (86%), and to a lesser extent on public sector assets (14%).

Exchange-traded derivatives markets

  • Notional amount outstanding of exchange-traded derivatives grew by 6.3% and reached a 10-year high at €60.7 trillion.
  • Daily average turnover ended the year 3.8% higher, driven by increases in turnover of interest rate futures and commodity options and futures.  

Over-the-counter derivatives markets

  • Outstanding positions in OTC derivatives markets fell by 3% at €421.1 trillion at end-2016. Of that, €341.4 trillion (81.1%) was interest rate contracts and €63.6 trillion (15.1%) foreign exchange contracts.
  • The gross market value of OTC derivatives rose to €12.9 trillion, due to a 36.2% increase in foreign exchange contracts.
  • Interest rate contracts denominated in euros declined by 12.1%, and foreign exchange derivatives denominated in euros by 3.7%.
  • The share of centrally cleared derivatives made significant inroads into all OTC derivatives markets, except foreign exchange.

Mutual funds

  • Investment fund net assets in Europe increased by 6.1% to €14.1 trillion, of which €8.2 trillion (61%) were UCITS.
  • All categories of investment funds experienced an increase in net assets in 2016, with bond funds recording a 21.6% rise in net assets, followed by equity (11.2%) and money market funds (5.8%).
  • Ireland saw the largest increase in net assets in 2016 (9.8%), while Luxemburg accounted for 27.6% of the European market.

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.

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