Stocks traded, turnover ratio of domestic shares (%)
Definition: Turnover ratio is the value of domestic shares traded divided by their market capitalization. The value is annualized by multiplying the monthly average by 12.
Description: The map below shows how Stocks traded, turnover ratio of domestic shares (%) varies by country. The shade of the country corresponds to the magnitude of the indicator. The darker the shade, the higher the value. The country with the highest value in the world is Namibia, with a value of 1,107.23. The country with the lowest value in the world is Uganda, with a value of 0.15.
Source: World Federation of Exchanges database.
Development Relevance: Stock market size can be measured in various ways, and each may produce a different ranking of countries. The development of an economy's financial markets is closely related to its overall development. Well-functioning financial systems provide good and easily accessible information which can lower transaction costs and subsequently improve resource allocation and boosts economic growth. Both banking systems and stock markets enhance growth, the main factor in poverty reduction. At low levels of economic development commercial banks tend to dominate the financial system, while at higher levels domestic stock markets tend to become more active and efficient relative to domestic banks. Open economies with sound macroeconomic policies, good legal systems, and shareholder protection attract capital and therefore have larger financial markets. Recent research on stock market development shows that modern communications technology and increased financial integration have resulted in more cross-border capital flows, a stronger presence of financial firms around the world, and the migration of stock exchange activities to international exchanges. Many firms in emerging markets now cross-list on international exchanges, which provides them with lower cost capital and more liquidity-traded shares. However, this also means that exchanges in emerging markets may not have enough financial activity to sustain them, putting pressure on them to rethink their operations.
Limitations and Exceptions: Data cover measures of size (market capitalization, number of listed domestic companies) and liquidity (value of shares traded as a percentage of gross domestic product, value of shares traded as a percentage of market capitalization). The comparability of such data across countries may be limited by conceptual and statistical weaknesses, such as inaccurate reporting and differences in accounting standards. Only domestic shares are used in order to be consistent with domestic market capitalization.
Statistical Concept and Methodology: Turnover ratio is the value of electronic order book (EOB) domestic shares traded divided by their market capitalization. The value is annualized by multiplying the monthly average by 12, according to the following formula: (Monthly EOB domestic shares traded / Month-end domestic market capitalization) x 12.
Aggregation method: Weighted average
General Comments: Stock market data were previously sourced from Standard & Poor's until they discontinued their "Global Stock Markets Factbook" and database in April 2013. Time series have been replaced in December 2015 with data from the World Federation of Exchanges and may differ from the previous S&P definitions and methodology.