Securities lending revenue boom for Hong Kong
14 August 2015 Hong Kong
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Hong Kong is enjoying a surge in lending revenues that has made the Asian jurisdiction the third largest equity lending market, behind the US and Germany, according to recent Markit data.
Asia as a whole recorded a 25 percent increase in total lending revenues compared to this time last year, which contrasts the negative growth seen in Europe, the financial information provider revealed.
Locally, Hong Kong equities topped the tables with a 57 percent increase in revenues generated for the year up to 10 August.
Growth was boosted by higher lending rates as the average borrow cost rose from an average of 1.27 percent to 1.92 percent as a result of higher demand for select securities.
China’s securities lending market is still in its infancy, but short sellers are flocking to the country, which has many dually listed shares and less demanding regulation.
Total global securities lending revenues remains steady year-on-year at $6 billion annually.
But flat aggregate number can hide significant inter-regional fluctuations, as short sellers shift their positions to react to global market forces.
For 2015, strong US and Asian results offset struggling European revenues, which trail last year’s regional total by 19.5 percent in dollar terms.
Overall, the current 2015 revenue total is 3 percent down from this time last year at $4.13 billion.
European revenue figures are affected by the rising dollar, which has a negative effect on euro-generated revenues.
Europe’s equities have suffered a 23 percent fall in revenues. The decline was not driven by the single market as seven European markets find themselves in the 10 global markets where securities lending revenue has fallen by the largest margin from last year’s total to date.
Americas securities lending revenues, which represent 46 percent of total global lending revenues generated so far in 2015, has built on last year’s bumper total and are up by over 7 percent.
This increase was largely driven by big increases in revenues generated by US equities and US-listed exchange-traded funds, which generated $147 million more revenue in the year to 10 August than they did up to the same point in 2014.
Asia as a whole recorded a 25 percent increase in total lending revenues compared to this time last year, which contrasts the negative growth seen in Europe, the financial information provider revealed.
Locally, Hong Kong equities topped the tables with a 57 percent increase in revenues generated for the year up to 10 August.
Growth was boosted by higher lending rates as the average borrow cost rose from an average of 1.27 percent to 1.92 percent as a result of higher demand for select securities.
China’s securities lending market is still in its infancy, but short sellers are flocking to the country, which has many dually listed shares and less demanding regulation.
Total global securities lending revenues remains steady year-on-year at $6 billion annually.
But flat aggregate number can hide significant inter-regional fluctuations, as short sellers shift their positions to react to global market forces.
For 2015, strong US and Asian results offset struggling European revenues, which trail last year’s regional total by 19.5 percent in dollar terms.
Overall, the current 2015 revenue total is 3 percent down from this time last year at $4.13 billion.
European revenue figures are affected by the rising dollar, which has a negative effect on euro-generated revenues.
Europe’s equities have suffered a 23 percent fall in revenues. The decline was not driven by the single market as seven European markets find themselves in the 10 global markets where securities lending revenue has fallen by the largest margin from last year’s total to date.
Americas securities lending revenues, which represent 46 percent of total global lending revenues generated so far in 2015, has built on last year’s bumper total and are up by over 7 percent.
This increase was largely driven by big increases in revenues generated by US equities and US-listed exchange-traded funds, which generated $147 million more revenue in the year to 10 August than they did up to the same point in 2014.
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