International Financial Services London: Over Half Of Financial Markets In Europe Grow Faster Than US In 2007

Key findings from IFSL’s annual report Financial Market Trends Europe vs.US 2008 show that in over half indicators - 10 out of 16 - financial markets in Europe grew more rapidly than the US in 2007. Over the longer period since 2001 activity in Europe rose relative to the US in 13 out of 18 markets.

Most of the gains over the past six years have been in 8 out of 9 sectors where activity in Europe is smaller than the US: these include hedge funds, securitisation and equity market turnover. Europe has also made some large relative gains since 2001 in sectors where it has the larger market, including IPOs, cross border bank lending, issuance of international bonds, and insurance premiums.

The US has made up ground in a few areas in recent years, particularly foreign equity trading, where the gap with Europe has been largely closed, as well as OTC derivatives where Europe’s lead has been curtailed. Even so, the overall trend over a number of years demonstrates London’s importance as the capital for many of Europe’s wholesale financial markets.

The report is based on 2007 data when the credit crunch was in its early phase so does not take account of the deterioration in credit markets in 2008. Some indicators such as investment banking revenue, securitisation and IPOs are likely to fall in 2008, but it is not yet clear how this will influence the relative positions of the US and Europe in financial markets.

Financial Market Indicators				Change	*Change*
				in 2007	*in 2007*
*Index for Europe where US = 100*	2001	2006	2007	over 2006	*over 2001*

Cross-border bank lending	634	744	776	+32	*+142*
Marine insurance premiums	425	595	610	+15	*+185*
Commercial bank assets	415	394	374	-20	*-41*
Foreign exch. turnover	349	---	333	---	*-16*
Int. bonds amounts	156	286	287	+1	*+131*
OTC derivatives turnover	421	---	275	---	*-146*
IPOs	28	162	239	+77	*+211*
Insurance premiums	84	124	137	+13	*+53*
Foreign equity trading	247	156	125	-31	*-122*

High net worth individuals assets	108	89	91	+2	*-17*
Inv. banking revenue	53	77	69	-8	*+16*
Domestic bonds amounts	46	58	65	+7	*+19*
Funds under management	57	63	62	-1	+5
Exchange-traded derivs turnover	53	54	62	+8	+9
Equity market turnover	42	52	55	+3	*+13*
Hedge funds assets2	15	36	36	0	*+21*
Private equity funds raised	30	55	34	-21	+4
Securitisation issues	7	18	21	+3	*+14*

Please click here to read IFSL's latest report on "Financial Market Trends Europe vs US 2008".