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Canadian equities trading volume drops 35% YoY while European rose by 60%

Canadian equities trading volume drops 35% YoY while European rose by 60%
Dino Kurbegovic

Most global equity markets have seen a decrease in trading volume as inflation has been picking up, and consequently, most equities have seen drawdowns. Macroeconomic issues ailing the world at large range from a war in Ukraine to supply chain pressures exacerbated by occasional lingering flareups of the Covid virus. 

Moreover, a leading provider of global market infrastructure and tradable products Cboe Global Markets Inc., reported on July 6 the monthly trading volume across its global business lines.   

The data sheet that was published contained an overview of certain June trading statistics as well as volume in select index products. Among the country’s equity markets, the largest drop year-on-year (YoY) was seen in Canadian equities, which dropped by -35%, on the other hand, the European equities trading volumes increased by 60.2%.

Average trading volume in major equity markets. Source: PRNewswire

Euro-area inflation

Eurozone inflation jumped to a record high of 8.6% in June, mostly driven by rising energy prices, mainly due to the war in Ukraine. Meanwhile, the hawkish European Central Bank (ECB) continued to signal a 50-basis-point interest rate hike as early as July, with a possible new rate hike in September. 

Yet, European equities have seen trading volume increases, as investors are probably seeing more ‘value driven’ stocks in Europe as the continent mostly underperformed compared to its U.S. peers in the previous years. 

Net Revenue Capture Guidance

Furthermore, average revenue per contract (RPC) or net capture based on a three-month rolling average showed the biggest discrepancies between the projected and actual transaction fees in Index options and Futures in the U.S. and Canadian Equities. 

Net revenue capture statistics. Source: PRNewswire

In short, certain markets have seen outflows of funds while others, which have traditionally seen slower markets, see large inflows. Europe seems to be on investors’ minds; some placed large short bets on EU equities, while others believe that globally they will outperform. 

Finally, market participants can track trading volumes to predict where global equity markets are headed and where more money is flowing in to try and catch that ever-elusive alpha. 

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