While the Dutch AEX is holding ground, the rest of the world is sinking again in negative territory. For a trader, falling markets are as good as rising markets. Well, as long as there’s any trading around.
German volumes fall
This is where the trouble starts. The Germans witness a spectacular drop in trading turnover. The German stock exchange trades fell 68 percent in to 105.5 billion euros in January compared with 330.4 billion euros a year earlier. The figure includes 93.1 billion euros in equities, warrants and exchange-traded funds and 12.4 billion euros in fixed-income securities.
70% decline in notional volume
A total of 90 billion euros was traded on Germany’s Xetra electronic-trading system and on the floor of Boerse, a 70 percent decline from last year. German equities accounted for 79.3 billion euros and foreign equities for 7.4 billion euros. Xetra transactions in January fell 42 percent to 14.6 million. To make things worse, the statistics show trading has been even thinner than previous month. This month, December, never counts as a serious month in trading (books closed, Christmas dinner, family matters).
Not all that bad
However, it’s not all that bad. The turnover is the average value of the shares multiplied by the quantity of trades. Except when you’ve been hiding in an Afghan cave for a few years, everyone will know the average value of the shares dropped around 45% over the year. Second, Deutsche Boerse lost it’s monopoly in German stocks. Chi-X is slowly eating away market share. Maybe another percent fell in a dark pool.
Still missing 30% trading volume. After the continuous stream of increasing trading volume in the last years, this news may buck the trend. With investors and banks sitting on their hands, dark clouds loom on the trader’s horizon. Turbulence without trading, sounds like a Jamiroquai track. Thin trading is boring, too.