LIV-EX - MARKET UPDATE
Bid:offer ratio touches new high since market low
This month the Liv-ex bid:offer ratio touched 1.76. This is the highest level it has been since May 2010 when the market was rising strongly on the back of the China-led boom. Also this month, the total value of live bids and offers on the Exchange reached a new record of £33.4 million.
Historically, a bid:offer ratio above 0.5 tends to indicate an uptrend in the market, or at the very least acts as a sign of price stability. In the four-year downtrend from the market peak in 2011, prices stopped falling when the bid:offer ratio stabilised at, or rose above the 0.5 level. In January, the bid:offer ratio rose above 1.0 for the first time since 2010 and since then the market has rallied.
Market activity is currently subdued as the 2015 En Primeur campaign takes centre stage, and with it the bid:offer ratio has pulled back. It currently stands at 1.43. Nevertheless, this is still a high ratio historically, a positive sign amid what has so far proved to be a lukewarm En Primeur campaign. However, with the most important releases still to come there is little room for error.
