A Reflection on Asian Market Growth

Equities markets have experienced huge growth in recent years. Over my 15 years in Securities Finance, I have seen a growth in Markets and a large number of changes, some of this we reflected on in the panel featuring industry experts from JP Morgan, BNP, Citi Bank, Northern Trust and Morgan Stanley.  

Not since 2018 have we seen revenue in European Equities outperform APAC equities, but this is increasingly commonplace with a reported 240% growth in AUM in the APAC region for Hedge Funds over 3 years. With incredible growth in APAC markets driven by multiple forces both in and out of Asia, it’s not surprising that we’re seeing interest grow rapidly in trading Asian Markets.  

Global market forces have played a hand in the increased desire to play in the APAC space. Geopolitical tensions with Russia and Ukraine have naturally had an impact globally, no market has escaped untouched. Rising oil prices, and the tied impact of this on the FED’s decision to increase interest rates, with the UK following suite, have drawn Agent Lenders and Ben Owners to safer waters. APAC markets have become a safe haven where they can deploy capital in a scalable way and there is an abundance of underlying liquidity in trading and new opportunities to explore.   

Regulation is still an area of focus as it can change more rapidly in the APAC region than in Europe or North America; there is good and bad to this. The good is the revenue opportunity presented by increased technological advancement driven by regulation such as with Stock Connect Collateral or Korea Collateral. The bad is the time and resource required to uptech or to partner with relevant vendors, but market participants are becoming ever more adept at this as regulation is ever more prevalent.  

The hero of the piece has been the emergence of China as an open market, where historically it has been a difficult market to enter. RWA under Basel III has had positive impact here in addition to the introduction of mechanisms which allow beneficial owners to participate in borrowing which have removed significant barriers to entry.  

We are seeing greater complexity in positions and number of offerings and it’s great to see this complexity come to the market, strongly demonstrating the pent-up demand to do more in APAC.  

The diverse and disparate nature of the region means that while companies need to be agile to keep up with regulation, that can change at short notice compared to other regions however, these changes also bring with them opportunities for those who can take advantage. Overall, we see our clients still looking at Asia as a region that holds potential of sizeable percentage growth and one that is front and centre of their future global plans.