Stock volatility has driven away many investors: NYSE exec

PARIS: Only the most speculative of investors such as hedge funds are still active on the stock market following the volatility of the past months, a NYSE Euronext executive said Thursday.

During the turbulent summer months, which left some European exchanges down 20 percent, "individual investors pulled out, institutional investors as well," NYSE Euronext deputy chief executive Dominique Cerutti said on France's BFM Business radio.

"Remaining on the market are hedge funds" and high frequency traders "which represent 75 percent of volume when it kicks into gear," he said.

High frequency trading utilises computer algorithms to determine profitable operations that are conducted automatically in milliseconds.

NYSE Euronext operates the New York Stock Exchange and the Paris-based Euronext.

Cerutti said hedge funds' trading strategy is based on a decrease in financial shares and on speculative increases in certain companies.

"This creates a lot of volatility," he noted.

Cerutti said three main factors were behind the extreme nervousness of markets: the global economic crisis, eurozone sovereign debt problems and concerns of the efficacy of certain measures taken by governments.

Copyright AFP (Agence France-Presse), 2011