Economics

Lowest Stock Turnover Ratios By Country

In 2015, the Cayman Islands, Luxembourg, and Bermuda each had domestic share turnover ratios of less than 1%.

The stock turnover ratio shows the number of times a company’s stock or shares traded and replaced over a given period. The stock turnover ratio can also be defined as the value of domestic share traded divided by their market capitalization. The stock turnover ratio is a widely used as an indicator of the size of the stock market and a high stock turnover ratio imply high efficiency of the market, while low turnover implies inefficiency. The ratio also shows the size of the stock market and the level of development in the whole country. The higher the stock ratio, the bigger the size of the stock exchange markets an indication of development level of the financial market of the country.

Cayman Islands

Stock traded ratio of the domestic share in the Cayman Islands was 0.2% in 2015. Cayman Island Stock Exchange is the leading equity market in the Cayman Islands. It listed securities worth $195 billion in 2015. The complex requirement for the listing of equity securities in the market has scared away some companies that cannot raise the required $5 million for listing. The economic recession of 2008 has continued to affect the stock exchange to date. Hardest hit was the hedge fund used by the government to invest in the stock market.

Luxembourg

Luxembourg stock traded ratio of the domestic share was 0.2% in 2015 up from 0.17% in 2014 signifying 0.029% growth rate. The global economic crisis in 2008 led to uneven economic growth in Luxembourg despite the high and stable economy. Luxembourg stock market offers two primary markets, namely a mainly EU-regulated market and an exchange-regulated market. Luxembourg stock market has brought more than 3000 issuers from around the world. Some of the challenges faced by the stock market include the constant repositioning in the evolving international stock market. Lack of diversification of activities in the stock market has also contributed to the low stock turnover in the market. Lack of an infrastructure that regulates reporting and data transmission that ensures transparency in the market has discouraged some potential investors while some investors have continued to question the existing traditional stock model.

Bermuda

Bermuda stock traded ratio of the total domestic share in 2015 was 0.8%. Bermuda domestic share turnover has been affected by the continued recession that has hit the country since 2008. Some of the instruments traded on Bermuda Stock Exchange include insurance linked securities with an aggregate value of $18 billion. Bermuda was attractive market for almost 60% of the globally listed insurance linked security accounting for 146 listed securities in 2015

Potential Inefficiencies in these Markets

Other countries with low stock turnover ratio include Bahrain 1.5%, Malta 2.0%, Peru 2.6%, Ivory Coast 4.2%, Argentina 4.8%, and Cyprus 4.9%. High turnover ratio means the company listed is active in the stock market. However, the low stock turnover ratio also means that the firm is not performing well. The stock turnover ratio is used to measure the size of the stock market, and a high stock turnover ratio implies high efficiency of the market, while low turnover implies inefficiency. The ratio also shows the size of the stock market and the level of development in the whole country. The higher the stock ratio, the bigger the size of the stock exchange markets an indication of development level of the financial market of the country.

Lowest Stock Turnover Ratios By Country

RankCountryTurnover Ration of Domestic Shares in 2015
1Cayman Islands0.2%
2Luxembourg0.2%
3Bermuda0.8%
4Bahrain1.5%
5Malta2.0%
6Peru2.6%
7Ivory Coast4.2%
8Argentina4.8%
9Cyprus4.9%
10Slovenia6.0%

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