<p>Although 2023 started on a solid foot, the stock market’s collapse in 2022 was
impossible not to notice. Substantial discounts on leading indices and a
continuously strengthening dollar have reduced retail investor activity on Wall
Street and almost every other stock trading floor worldwide.</p><p>Have
investment firms felt the decline in <a href=”https://www.financemagnates.com/terms/e/equities/” class=”terms__main-term” id=”d6e02698-4c6b-44dd-ab57-9ff12763325c” target=”_blank”>equities</a> interest? Which instruments may
have proved more attractive last year? Finance Magnates delved into the
reports of publicly listed trading firms and spoke to industry representatives
for answers in the newest Quarterly Industry Report.</p><p><a href=”https://www.financemagnates.com/intelligence/products/qir/q42022/” target=”_blank” rel=”follow”>Grab your
copy of our latest Quarterly Intelligence Report for Q4 2022 before your
competitors and stay up-to-date with crucial developments in the Forex and CFD
industry!</a></p><p>Equities Decline Bad for
CFDs Popularity</p><p>After over a decade of almost uninterrupted gains, global stock markets finished 2022
with the steepest declines since the Great Financial Crisis of 2008. The
S&P 500 index lost nearly 20%, the <a href=”https://www.financemagnates.com/tag/nasdaq/” target=”_blank” rel=”follow”>Nasdaq 100 technology index</a> gave back as
much as 33%, and the MSCI World equity index was down 18%.</p><p>As a
result, instead of betting on equities, investors looked for a place to hide in
the safe-haven dollar, which gained more than 8% to a basket of currencies. At
one moment in 2022, it rose by 20%, reaching record highs. Bond yields gained
along with the greenback: the US 10-year debt note <a href=”https://www.financemagnates.com/terms/y/yield/” class=”terms__secondary-term” id=”cfaa38df-248b-415d-a58f-1c65a6b5fdac” target=”_blank”>yield</a> rose 156% and tested
levels above 4.3%, which is the highest since 2007.</p><p>Filippo
Ucchino, the Founder and CEO at InvestinGoal, a trading research platform for
retail traders, states that Google Trends shows a visible slump in the popularity
of shares trading amongst CFD traders.</p><p>“The
decline in Big Tech stock prices in 2022 was indeed directly related to a loss
of user interest in Equity CFD trading. A keyword analysis on Google Trends
shows that interest in stock CFDs has dropped in a very similar way,” Ucchino
commented.</p><p>“While
interest in Big Tech stock price movements remained more or less in line, even
experiencing some spikes (for example, as a result of the various layoff news),
interest in stock CFD trading dropped about 50%, very similar to the -46%
decline by the Big Techs overall,” Ucchino added.</p><p>Publicly Listed Brokers
Show Lower Shares Trading Revenues
</p><p>Looking at
the financial reports of IG Group, CMC Markets and XTB, there is an apparent
slowdown in revenue resulting from trading equities. According to the IG
Groups’ interim results report for the six months ended 30 November 2022, “Stock
trading and investments” <a href=”https://www.financemagnates.com/forex/ig-sees-10-revenue-jump-in-h1-fy23-extends-share-buyback-program/” target=”_blank” rel=”follow”>accounted for the smallest share of the broker’s revenue</a>,
recording a decline of 30% compared to the same period a year earlier. Total
revenue in H1 FY23 was £11.3 million, which is down from £15.9 million in 2021.
Net trading revenue in stock trading and investment per client also fell by 29%
to £122.</p><p>The CMC
Markets report, published in November and covering the six months ended 30
September 2022, reached similar conclusions. The broker showed an overall
increase in net operating income of 21% YoY, to £153.5 million, but a <a href=”https://www.financemagnates.com/forex/cmc-markets-positive-with-fy23-income-gains-singapore-license-for-invest/” target=”_blank” rel=”follow”>14% fall
in investing net revenue</a> over the same period, to £20.8 million from £24.2
million.</p><p>Watch the recent FMLS22 panel titled: “What CFDs Traders Value Most & How They Choose Their Brokers.”</p><p>We can look
for the most up-to-date information regarding the popularity of shares trading
amongst CFD traders in XTB’s 2022 initial financial report, <a href=”https://www.financemagnates.com/forex/brokers/xtb-sees-dull-q3-profits-despite-solid-client-activities/” target=”_blank” rel=”follow”>published
in early February</a>. The turnover of equity CFDs amounted to PLN 1.1 million in
the last quarter of 2022, falling by more than 90% compared to the PLN 11.5
million reported in the same period a year earlier. Thus, it is evident that
the trading activity bottomed out with the market itself.</p><p>After the Storm, the Sun Comes Out</p><p>In 2022,
equities were no longer the favorite instruments of retail investors, including
in the CFD industry. Commodities or currency pairs became way more popular due
to the almost continuously rising dollar. </p><p>However,
according to experts interviewed by Finance Magnates, the market storm should
calm down, and the first rays of sunshine will appear again in 2023.</p><p>To get
the full article and the bigger picture on equity market valuation and its
influence on CFDs trading popularity, get our <a href=”https://www.financemagnates.com/intelligence/products/qir/q42022/” target=”_blank” rel=”follow”>Latest Quarterly
Intelligence Report</a>.</p>
This article was written by Damian Chmiel at www.financemagnates.com.
