Morning Report Monday 1 September 2014
How will local companies be affected by significant falling equities turnover?
The global market-making goliath Optiver has announced it will no longer be making markets on the ASX, dealing another blow to the local exchange. This can only have a negative impact on the option liquidity locally, which has already experienced a 20% decline over the fiscal year. Market participants have a number of explanations for the recent demise of option turnover and while I believe some of it may be self-inflicted, the major issue is surely the collapse in option volatility, caused by mass by economic stimulus (free money) from the world’s Central Banks – this will not last forever. Chart 1 clearly illustrates zero growth in equities turnover over the last 10 years and far worse over the last 5 years, this must surely be putting some pressure on the ASX. The 2006 merger between the ASX and SFE (Sydney Futures Exchange) is definitely aiding the overall company profitability. However, all of the above is history, what comes next and how we can benefit from investments is my concern. The below three stocks profitability is significantly influenced by markets activity & turnover:
Show more...
