I got a bit of stick for a recent post where I wrote about the apparent move back into equities trading in January. To be fair, I was only referencing other people’s work but, nevertheless, I was anxiously awaiting the numbers for February. The good news is that volumes in Europe seem to have held up pretty well.
Just as before though, I asked the boffins to strip out the HFT ‘noise’ and just focus on the ‘real’ institutional flow executed by Fidessa’s sell-side clients in Europe. The guys must have had three shredded wheat for breakfast because they went one better and created the chart below which does a great job of showing the change in the value of the flow over the past year.
This chart is based on a value of 1000 for January 2012 and then tracks weekly institutional equity volumes from January through to today. As you can see, executed order flow has risen sharply and the closing value at the end of February was 1484 – a rise of nearly 50% in just 13 months and only 7% away from the high we saw in January. Obviously some of this is explained by general rises in the value of equity assets as broader European indices have risen by about 15%. But, if you’re a European sell-side broker and your volumes aren’t showing the same positive trends, then chances are that someone’s been eating your lunch (or at least eyeing it up anyway).
When we compared this with the picture for retail order flow, the trends were even more dramatic.
You can see that all this talk of the great rotation, higher inflation and negative interest rates has got retail clients thinking about their equity exposures too as the chart shows a 13-month high – a rise of close to 90%. A clear sign that the private investor has got his risk boots firmly strapped on.
It will be interesting to see if these trends continue and so we will publish these charts on a regular basis. If you have any suggestions or would like to see more detail – by sector, for example – then please just let us know.