Statistical Data/Charts
Key Trends in the Securities Industry
last updated 1/13/05TABLE OF CONTENTS
- U.S. UNDERWRITING EXCEEDS $3 TRILLION
- IPO ACTIVITY REBOUNDS IN 2004
- SHARE VOLUME REMAINS HIGH AS STOCK PRICES FLATTEN
- CROSS-BORDER TRADING HAS GROWN DRAMATICALLY SINCE 1980
- FOREIGN INVESTORS’ U.S. PORTFOLIOS REACHED RECORD VALUATIONS; U.S. HOLDINGS’ VALUATIONS JUMP IN 2004
- INDIVIDUAL OWNERSHIP IN SECURITIES GREW STEADILY AS HOUSEHOLDS SHIFTED ASSET OWNERSHIP MIX
- INDIVIDUAL OWNERSHIP OF EQUITIES IN THE U.S. CONTINUES TO GROW
- SECURITIES INDUSTRY PRE-TAX PROFITS DIP IN 2004
- U.S. M&A CYCLE TURNS UP
- INDUSTRY EMPLOYMENT HAS BEEN SLOWLY RISING SINCE MAY 2003’s LOW
2004 KEY TRENDS IN THE SECURITIES INDUSTRY
U.S. UNDERWRITING NEARLY $3 TRILLION FOR SECOND-STRAIGHT YEAR
The securities industry raised $2.9 trillion of capital for U.S. businesses in 2004 through corporate underwriting activity in the United States. This marks the second-straight year in which nearly $3 trillion was raised for businesses through the sale of newly issued stocks and bonds to the general public. In the last five years alone, the industry raised over $12.7 trillion for U.S. businesses, an amount that already surpasses the $12.4-trillion total raised during the 30-year period from 1970 to 1999.
The amount of equity raised in the U.S. market for new, start-up, and small U.S. businesses through the sale of initial public offerings rebounded in 2004. After a three-year downturn from a record $76 billion in 2000 to a 13-year low of $16 billion in 2003, dollar proceeds from initial public offerings tripled to $48 billion in 2004. Latest information available here.
SHARE VOLUME REMAINS HIGH AS STOCK PRICES RISE
Average daily share volume on the New York Stock Exchange and NASDAQ Stock Market remains strong. NYSE daily volume increased 4.2 percent from 1.40 billion in 2003 to a record1.46 billion in 2004. Nasdaq daily volume averaged 1.80 billion, 6.9 percent above 2003’s 1.69 billion and second only to 2001’s record 1.90 billion. These 2004 figures are roughly two times the daily average traded just five years earlier.
In addition, the U.S. stock market posted back-to-back yearly gains for the first time since 1999. In 2004, the Dow Jones Industrial Average increased 3.1 percent and the NASDAQ Composite Index gained 8.6 percent, while the S&P 500 Stock Index added 9.0 percent and the NYSE Composite Index rose 12.6 percent. Latest information available here.
CROSS-BORDER TRADING HAS GROWN DRAMATICALLY SINCE 1980
As Americans’ ownership of securities increased from 1980 until today, so, too, did their investment activity in foreign securities. From 1980 to today, U.S. gross activity (both purchases and sales) in foreign securities grew dramatically from $53 billion to almost $7.4 trillion (annualized based on data from the first eight months of 2004). Foreign gross activity in U.S. securities has also grown exponentially from $198 billion in 1980 to $32.95 trillion today (annualized based on data from the first nine months of 2004).
FOREIGN INVESTORS’ U.S. PORTFOLIOS REACHED RECORD VALUATIONS; U.S. HOLDINGS’ VALUATIONS FLAT IN 2004
The total value of Americans’ holdings in foreign securities in 2004 increased slightly above 2003’s level, inching up from $2.35 trillion to approximately $2.46 trillion through the first half of 2004 (and closing in on year-end 1999’s peak value of $2.5 trillion). Additionally, the ongoing net purchases of U.S. securities by foreigners continued to bring the total value of their U.S. portfolios to a new high – now standing at almost $6 trillion by September 2004.
INDIVIDUAL OWNERSHIP IN SECURITIES GREW STEADILY AS HOUSEHOLDS SHIFTED ASSET OWNERSHIP MIX
Nearly three-fourths of Americans’ liquid financial assets today are invested in securities-related products, such as stocks, bonds, and mutual funds (73 percent), with the balance in bank deposits and certificates of deposit, according to Federal Reserve data. In 1975, more than half of Americans’ assets were in bank deposits (55 percent). The total value of assets grew from $1.7 trillion at year-end 1975 to a peak of $19.3 trillion in the first quarter of 2000, before falling back to $16.6 trillion in the third quarter of 2004 (a 10-fold increase since 1975). For the latest information, go to: http://www.federalreserve.gov/releases/Z1/
INDIVIDUAL OWNERSHIP OF EQUITIES IN THE U.S. CONTINUES TO GROW
Over the last two decades, the growth in individual investor participation has risen from 30.2-million U.S. shareowners in 1980 to 84.3 million in 2002. The percent of U.S. households owning equities (either stock or stock-mutual funds) has likewise grown, from 32.5 percent in 1989 (the first year data are available) to almost half in 2002 (49.5 percent), according to a survey published in 2002 by the Investment Company Institute and SIA, Equity Ownership In America.
A sustained period of economic growth, a record bull market, baby boomers’ need to prepare for retirement, and the change in employers’ retirement programs from defined-benefit to defined-contribution plans all led to the steady growth in equity ownership over the past three decades.
SECURITIES INDUSTRY PRE-TAX PROFITS DIP IN 2004
Pre-tax profits for all broker-dealers doing a public business are forecast to reach $19.5 billion in 2004, down 19.1 percent from 2003's $24.1 billion. This is, however, up from $16.0 billion in 2001 and $12.1 billion in 2002. Gross revenues remained higher after slumping in the two previous years, increasing 6.8 percent from 2003's $212.7 billion to $227.3 billion, while net revenues increased 2.9 percent.
Last year witnessed a substantial improvement in M&A activity compared to a slow 2003. The value of announced merger-and-acquisition deals of U.S. target companies surged 58 percent in 2004 to $834 billion from $528 billion in 2003. Completed M&A activity shot up 66 percent to $749 billion from $451 billion in 2003. While these numbers are still sharply down from their 2000 peaks of $1.74 trillion and $1.77 trillion, respectively, they signal a dramatic turnaround from the prior two years.
INDUSTRY EMPLOYMENT HAS BEEN SLOWLY RISING SINCE MAY 2003’s LOW
Between 2001 and 2003, the securities industry went through one of its worst contractions. The industry lost 83,100 jobs nationwide between the peak of 840,900 in March 2001 and the recent low of 757,800 in May 2003. Since the May 2003 low, the industry has regained a total of 41,100 jobs – a 5.4 percent increase over an 18-month period to 798,900 in November 2004, or a recovery to date of less than half the job losses from peak to trough. Latest employment numbers available here.