BBH: Securities lending demand high following ECB reports
28 January 2019 New York
Image: Shutterstock
Securities lending demand in Europe has been high as shares dropped 18.5 percent, and Italian banks dropped this week as reports emerged that the European Central Bank (ECB) told lenders they have to clean up bad debt, according to a ‘Mind on the Markets’ Brown Brothers Harriman (BBH) blog.
While all banks under ECB supervision were supposedly sent advice from the regulator in December, Banca Monte Paschi (BMPS) has been the only one so far to disclose its contents, BBH revealed.
This confirmed that the ECB highlighted the weaknesses in its capital and profitability and requested that it increase coverage of soured debt.
Securities lending industry utilisation is at 96 percent of available shares, according to DataLend, and short interest is at 10 percent of free float, the blog noted.
Meanwhile, in the Asia Pacific, several Hong-Kong-listed stocks plunged last week led by Jiayuan International Group, which fell by 81 percent in just a few minutes.
Analysts saw short-term lending interest for Jiayuan International Group following the share price drop.
Additionally, analysts saw long term securities lending demand for Chiyoda, a Japanese energy engineering firm, which has seen its shares tumble by over 50 percent since October last year.
In the Americas, there was an increased demand for the Chinese e-commerce company, Baozun, as the share price rebounded after losing 17.2 percent in December.
Of this, BBH said that this marks a good entry point for bearish spectators. It added that the company has seen sharp declines as slowing economic growth and ongoing trade tensions between China and the US weighed on its outlook.
Bilibili, the Chinese provider of online video platforms and services, remains a directional focus name as the stock price continues to be volatile, BBH found.
According to BBH, revenue rose 48 percent in its latest quarter, as monthly active users climbed 25 percent to 92.7 million among young fans.
BBH noted in the blog that Bilibili is more prone to big swings in its share price than its nearest competitors because it’s a fairly new stock.
One analyst indicated that investors are still likely trying to figure out this unfamiliar company and stock.
While all banks under ECB supervision were supposedly sent advice from the regulator in December, Banca Monte Paschi (BMPS) has been the only one so far to disclose its contents, BBH revealed.
This confirmed that the ECB highlighted the weaknesses in its capital and profitability and requested that it increase coverage of soured debt.
Securities lending industry utilisation is at 96 percent of available shares, according to DataLend, and short interest is at 10 percent of free float, the blog noted.
Meanwhile, in the Asia Pacific, several Hong-Kong-listed stocks plunged last week led by Jiayuan International Group, which fell by 81 percent in just a few minutes.
Analysts saw short-term lending interest for Jiayuan International Group following the share price drop.
Additionally, analysts saw long term securities lending demand for Chiyoda, a Japanese energy engineering firm, which has seen its shares tumble by over 50 percent since October last year.
In the Americas, there was an increased demand for the Chinese e-commerce company, Baozun, as the share price rebounded after losing 17.2 percent in December.
Of this, BBH said that this marks a good entry point for bearish spectators. It added that the company has seen sharp declines as slowing economic growth and ongoing trade tensions between China and the US weighed on its outlook.
Bilibili, the Chinese provider of online video platforms and services, remains a directional focus name as the stock price continues to be volatile, BBH found.
According to BBH, revenue rose 48 percent in its latest quarter, as monthly active users climbed 25 percent to 92.7 million among young fans.
BBH noted in the blog that Bilibili is more prone to big swings in its share price than its nearest competitors because it’s a fairly new stock.
One analyst indicated that investors are still likely trying to figure out this unfamiliar company and stock.
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