April 22, 2020

European Capital Markets Continue To Function Well During COVID-19

AFME has published a new piece of research on the “Initial impact of COVID-19 on Europe’s capital markets”. The report analyses the impact of COVID-19 across equities, fixed income, FX, derivatives, and banks.

The main finding is that European capital markets have continued to operate well following the outbreak of COVID-19, with liquidity ranging from very good to mixed, depending on the sector. There have been record volumes of new issuance in certain sectors.

Other findings:

  • Issuance of investment grade corporate bonds surpassed EUR 50bn in the first week of April, the highest weekly amount ever issued in Europe. French companies have been particularly active in this respect
  • IPO issuance on European exchanges has declined 83% compared to a year ago. Markets are more volatile, which has made it costly for some companies to list through IPOs
  • Equity average daily trading has surged 94% year on year in March-20
  • Corporate bond trading increased 31% year on year in Q1 2020
  • FX trading rose 61% year on year in March-20.
  • The rapid increase in securities trading and post-trade activity has been carried out without any major disruption from a business continuity perspective
  • Securitisation secondary markets have suffered disproportionate reductions in liquidity due to central bank support which is more limited in scope, and slower and more difficult to access than for other fixed income sectors
  • Banks operating in Europe are well-positioned from a solvency and liquidity perspective to support households and businesses during this period of abnormal economic

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