Do we observe today, because of coronavirus, any similarities to financial crisis of 2008?
Over 20 million people in America lost their jobs in just one month. On the financial markets, COVID-19 caused the highest Volatility in at least 12 years, and according to some analysts, it could lead to the biggest market collapse since WWII. Finance Magnates Intelligence took the volatility during the last two crises under the magnifying glass, checking when price fluctuations were greatest.
2008 vs. 2020: How does the Coronavirus crisis affect the valuation of financial instruments?
Although the subprime mortgage crisis that began in the United States in December 2007 and then spilled over into the world in the form of a widespread recession was mainly associated with the collapse of Lehman Brothers, the bank went bankrupt only in September 2008. During that time, the market observed one of the strongest volatilities, comparable to the current one.
It is widely believed that the current crisis and panic-stricken sales on the financial markets have brought the greatest volatility in modern market history. This is being somewhat confirmed by Wall Street, where traders observed the worst and best weeks since the crisis of the 1930s and the strongest two-day slides in history.
From the perspective of the analyzed period of almost three months, the S&P 500 index in 2020 presents a visibly lower drop. The difference between the prices at the beginning of February, when the index drew historic highs, and the end of April was nominally about 400 points, translating into a 15% decrease. Although in 2008, the same index was valued 2.5 times cheaper, the percentage fall in the comparable period was 33%. However, on the daily average volatility basis, 2020 brought stronger moves (3% per day vs. 2.4% in 2008).
Brokers are reporting record-breaking figures
On November 21, the CBOE index that tracks market volatility reached the level of 80.74 points, which was the highest in the history of the benchmark. On March 16, 2020, however, the all-time high was breached. The heightened price fluctuations had a visible impact on the brokers' results and reported numbers, bringing a very strong growth of the client base and revenues.
"From the brokerage houses' point of view, Covid-19 has primarily influenced the volatility of global financial markets, and such volatility means a greater interest in investment accounts. In XTB, the number of new clients in January and February oscillated at 4600, and in March, this number increased to over 12000. The current volatility has also translated into higher turnover, which in the first quarter of 2020 was the highest in the history of the company," – said Omar Arnaout, CEO at X-Trade Brokers DM S.A.
GAIN Capital Holdings, Inc., the largest provider of retail FX in the United States, showed a strong increase in revenues relative to last year, as corona sparks traders' activity. Gain's net income rose to $77.3 million in the first quarter, a significant advance from a loss of $28 million. On a quarterly basis, the company's revenue rose 250 percent from $53.3 million in the fourth quarter of 2019.
At this point, we are only at the beginning of the coronavirus-recession, and no one knows how strong the effect on the world economy could be. But the statistics so far may be encouraging. At least in terms of investment platforms, which had largely gained on the current situation. However, the global economy may face a much more negative scenario.
To get the full article and the bigger-picture perspective on the coronavirus affecting the financial industry, get our latest Quarterly Intelligence Report.
Over 20 million people in America lost their jobs in just one month. On the financial markets, COVID-19 caused the highest Volatility in at least 12 years, and according to some analysts, it could lead to the biggest market collapse since WWII. Finance Magnates Intelligence took the volatility during the last two crises under the magnifying glass, checking when price fluctuations were greatest.
2008 vs. 2020: How does the Coronavirus crisis affect the valuation of financial instruments?
Although the subprime mortgage crisis that began in the United States in December 2007 and then spilled over into the world in the form of a widespread recession was mainly associated with the collapse of Lehman Brothers, the bank went bankrupt only in September 2008. During that time, the market observed one of the strongest volatilities, comparable to the current one.
It is widely believed that the current crisis and panic-stricken sales on the financial markets have brought the greatest volatility in modern market history. This is being somewhat confirmed by Wall Street, where traders observed the worst and best weeks since the crisis of the 1930s and the strongest two-day slides in history.
From the perspective of the analyzed period of almost three months, the S&P 500 index in 2020 presents a visibly lower drop. The difference between the prices at the beginning of February, when the index drew historic highs, and the end of April was nominally about 400 points, translating into a 15% decrease. Although in 2008, the same index was valued 2.5 times cheaper, the percentage fall in the comparable period was 33%. However, on the daily average volatility basis, 2020 brought stronger moves (3% per day vs. 2.4% in 2008).
Brokers are reporting record-breaking figures
On November 21, the CBOE index that tracks market volatility reached the level of 80.74 points, which was the highest in the history of the benchmark. On March 16, 2020, however, the all-time high was breached. The heightened price fluctuations had a visible impact on the brokers' results and reported numbers, bringing a very strong growth of the client base and revenues.
"From the brokerage houses' point of view, Covid-19 has primarily influenced the volatility of global financial markets, and such volatility means a greater interest in investment accounts. In XTB, the number of new clients in January and February oscillated at 4600, and in March, this number increased to over 12000. The current volatility has also translated into higher turnover, which in the first quarter of 2020 was the highest in the history of the company," – said Omar Arnaout, CEO at X-Trade Brokers DM S.A.
GAIN Capital Holdings, Inc., the largest provider of retail FX in the United States, showed a strong increase in revenues relative to last year, as corona sparks traders' activity. Gain's net income rose to $77.3 million in the first quarter, a significant advance from a loss of $28 million. On a quarterly basis, the company's revenue rose 250 percent from $53.3 million in the fourth quarter of 2019.
At this point, we are only at the beginning of the coronavirus-recession, and no one knows how strong the effect on the world economy could be. But the statistics so far may be encouraging. At least in terms of investment platforms, which had largely gained on the current situation. However, the global economy may face a much more negative scenario.
To get the full article and the bigger-picture perspective on the coronavirus affecting the financial industry, get our latest Quarterly Intelligence Report.
A graduate of the Warsaw School of Economics, Sylwester received an MA specializing in finance and banking. As Finance Magnates' research associate and STA certified analyst, he leaves no stone unturned. Sylwester is the previous minority partner of an NFA registered US forex broker, and since 2003, has participated in many forex projects.
Interactive Brokers Expands Offerings with Daily Options on French Stocks
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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