The rundown on Asia
04 February 2025
Market participants highlight the key securities lending markets capturing the industry’s attention and what each has to offer for Asia, as well as how retail investors and digital transformation is impacting the region. Carmella Haswell reports
Image: stock.adobe.com/irawan
Emerging markets
The industry is on the lookout for promising emerging markets which could prove beneficial for participants. While the Middle East has gained much attention over the past 12 months, the potential for Latin America has peaked interest, and the removal of stamp duty on securities lending transactions looks to provide further opportunity in Greece.
When it comes to Asia, market participants have noted a common attentiveness in Indonesia and the Philippines, as they look to drive further liquidity in these markets.
Speaking to Securities Finance Times, Maybank Securities CEO Aditya Laroia notes: “In Asia, we would like to focus on large emerging economies, notably Indonesia and the Philippines, where onshore lending obstacles tend to exist, to allow international borrowing of assets. In the meantime, we will work on potential intermediation and alternatives.”
Another interested party is the stock exchange of Hong Kong, HKEX, which has been actively expanding its international presence through strategic partnerships and overseas offices. To grow its market network, the exchange has confirmed a cooperation agreement with the Indonesia Stock Exchange.
Notably, another market which is drawing much attention given recent developments is South Korea. Andrew McCardle, head of EquiLend Asia, says the big focus and question for 2025 is Korea. He asks: “Will the go-live date of 1 April for lifting the short selling ban be a day of significant activity? Or will it be a cautious move back into a market that back in 2019 was the second-biggest market in the region, with its sights firmly set on the number one spot?”
In APAC, the start of 2024 was uncertain due to the South Korean short selling ban introduced in the previous November, which “continued to loom over the securities lending market”, states Matthew Chessum, director of securities finance at S&P Global Market Intelligence. He confirms that the ban followed a period of record revenues for the country and region, casting uncertainty on future performance.
In March 2025, South Korea will lift the short selling ban. Chessum explains that the scheduled reopening of South Korea is likely to provide additional opportunities for lenders and borrowers. “Heading into the short selling ban during 2023, revenues in South Korea were hitting new highs. The South Korean economy has a strong focus on technology and innovation and is likely to provide lenders and borrowers a renewed source of revenues.”
McCardle interjects: “Demand will be high, but with the regulatory hurdles and added cost of tech and personnel, the outstanding question will be: will this be a market that many firms go back into in scale early in the year? Only time will tell, but I believe that we will not see too much activity until the second half of the year.”
Taiwan and Malaysia
Reviewing the APAC landscape over the past 12 months, arguably the two standout markets have been Taiwan and Malaysia.
In a year marked by a two per cent decline in market revenues and average fees across Asia, lending in the region's equities demonstrated remarkable resilience given the challenges it faced, according to S&P Global Market Intelligence data. In addition, Taiwan and Malaysia have showcased “impressive growth” in revenues, average fees, and balances.
“The experiences of both Malaysia and Taiwan illustrated the increasing accessibility investors enjoyed in terms of securities lending across the region,” reports Chessum.
“Once viewed as complex markets due to pre-sale notification requirements and stringent penalties for trade settlement failures, the growth in demand and revenues in these markets underscored that, with the right controls and processes in place, lenders enhanced their ability to navigate these additional transactional complexities.”
Overall, while 2024 presented its share of challenges, Chessum believes the robust performances of Taiwan and Malaysia signalled a “promising outlook for Asian equities”, driven by demand for assets in these relatively new markets and strategic market adaptability “growing the number of new opportunities” for both lenders and borrowers.
S&P Global Market Intelligence names the surge in AI and the corresponding demand for advanced chip and semiconductor capabilities, as a significant catalyst for stock market performance throughout 2024.
Taiwan is a “powerhouse” in the global semiconductor arena, responsible for approximately 60 per cent of the world's semiconductor production. “This dominance, coupled with its expertise in technology and hardware, fostered robust securities lending demand for Taiwanese equities,” adds Chessum.
Consequently, Taiwan emerged as the highest revenue-generating market in the region, according to data from S&P Global Market Intelligence, amassing US$768 million — equivalent to the combined revenues of the seven highest-grossing European countries.
Similarly, Malaysian equities experienced “a remarkable surge” in demand throughout 2024, with revenues “skyrocketing” by 73 per cent year-over-year (YoY). Average fees in this market also saw a healthy increase of seven per cent, Chessum reports.
Malaysian equities catered to a broader spectrum of investor needs, with capital goods, semiconductor, and utility companies all contributing to strong revenue figures. Sunway Bhd took the lead as the highest revenue-generating stock in Malaysia, reporting annual revenues of US$2.3 million.
Chessum concludes: “As investors look to navigate these changes, the markets of Taiwan and Malaysia are emerging as attractive opportunities for lenders. The size and growth potential of these markets can provide additional revenue avenues, further enriching the securities lending landscape in the APAC region.
“As these dynamics unfold, 2025 promises to be a year of robust activity and opportunity for participants in the securities lending market across the APAC region.”
China
China is set to remain crucial in 2025, boosting Asia’s economic and innovative status, according to HKEX. Speaking with Securities Finance Times, an exchange representative notes that global investors are underinvested in China, which could present an opportunity for asset managers to increase allocations in the world's second-largest economy.
China's economy is undergoing structural changes with expanding capital markets and diversified portfolios. Emerging sectors include new energy, environmental protection, electronic vehicles, AI, biotech, advanced hardware, and semiconductor materials.
“Moreover, China's ambitious decarbonisation plans present massive opportunities. The country's focus on green technology and sustainability initiatives is expected to create new investment opportunities and drive long-term growth,” says HKEX.
As a key international financial centre in Asia, Hong Kong is positioned to offer two-way connectivity between mainland China and the rest of the world, attracting international issuers and providing an “efficient market infrastructure and a robust regulatory framework”.
With the Connect programme linking mainland China’s onshore market and Hong Kong’s internationally-facing market, HKEX says Hong Kong is “the market to be in” to facilitate these cross-border flows with globally-recognised market rules and standards.
HKEX has been expanding its Connect programme with new products — such as the additions of bonds, ETFs, and interest rate swaps — and new market infrastructure, including additional trading days and Master SPSA services.
To support the continued development of Hong Kong as a financial centre and encouraging more participation from offshore investors, HKEX highlights its work to enhance market infrastructure to drive liquidity in the securities markets, through the introduction of the Hong Kong dollar/renminbi Dual Counter Trading Model, implementation of severe weather trading, as well as reducing the minimum spreads for certain securities.
Commenting on the year ahead, Chessum says: “With the possibility of further stimulus measures in mainland China, there is potential for significant movement in the stock market, creating numerous opportunities for investors looking to capitalise on market fluctuations.”
Digital transformation
The increasing use of AI in the West brings into question the road to digital transformation, and it appears firms are eager to invest in their technology infrastructure to provide for future innovations. As Chessum puts it: “Behind every great product is a robust technical foundation.”
For S&P Global Market Intelligence, the use of AI and machine learning (ML) has led to the improvement of the firm’s ability to identify erroneous or outlier transactions, enabling it to detect abnormal variances in volumes and fees across various asset classes and markets. “This advancement represents a major step forward in our data cleansing and aggregation processes, ensuring that we consistently deliver best-in-class data,” Chessum highlights.
AI is helping to drive activity and interest in markets such as Taiwan due to the firms listed in the country, according to McCardle. With market nuances and multiple language barriers, some questions arise as to how to implement AI in the region.
For EquiLend, the firm is moving its distributed ledger technology (DLT) solution 1Source from beta phase to full go-live with multiple clients in 2025. McCardle explains: “We continue to engage and see keen ongoing interest from clients in Asia as to how this tech can help to bring significant risk mitigation into markets such as Korea and Taiwan in the future.”
While it may be harder to implement in the region, McCardle insists the potential reward from DLT and AI from a risk mitigation perspective could be the largest of all the regions in the world.
The value of AI is also a topic explored across Maybank entities. This technology is beginning to be implemented in research and recommendation processes at Maybank Securities, especially towards its retail clients.
Laroia adds: “But more specifically in the lending space, it remains a key area of interest. Maybank will liaise with our technology providers to see how they are accessing the various fragmented offerings. The expectation would be that the exchanges look to implement where they can, especially if T+1 gets onto the agenda that the collateral agents and custodians generate solutions to reduce settlement and credit risks.”
At HKEX, the exchange has applied AI in assisting to extract and review the information from the announcements and annual reports published by all issuers listed on its markets, therefore enhancing vetting capabilities and compliance work, its spokesperson says.
“The integration of AI in securities lending data provision has led to significant positive impacts for the market, particularly in enhancing short squeeze score calculations and trend analysis,” highlights Chessum. “By leveraging advanced algorithms, AI can process vast amounts of data at unprecedented speeds, allowing for real-time insights that were previously unattainable.”
He indicates that rapid data processing enables market participants to assess short squeeze risks more accurately, identifying potential opportunities and threats with greater precision. In addition, Chessum suggests AI-driven trend analysis helps traders to recognise patterns and shifts in market behaviour, facilitating more informed decision-making.
“Overall, the amalgamation of AI in this domain not only improves efficiency but also empowers participants to navigate the complexities of the securities lending landscape with enhanced confidence,” he insists.
Retail investors
Retail investors are taking an interest in securities lending, using it to gain incremental value via trading platforms. From an Asia perspective, retail investors have played a “significant role”, particularly in South Korea and Japan, according to Karen King, head of data solutions sales for APAC at S&P Global Market Intelligence. She notes that this influence is now expanding to Hong Kong.
“In Japan and the Hong Kong special administrative region, retail investors tend to be more comfortable utilising securities lending to generate incremental value. However, for this market to truly thrive, we need to see further enhancements in trading platforms and workflows that facilitate the efficient use of retail-held stocks,” says King.
Currently, there remains skepticism regarding the stability and efficiency of trading in this area. Nonetheless, King believes the potential for lucrative opportunities is evident, especially with access to more mid and small-cap companies.
In recent developments, Maybank Securities in Singapore went live with retail lending in 2024 and aims to roll this out to clients across permitted ASEAN markets in the next 18 months.
Laroia comments: “It is the natural evolution of the markets where offerings traditionally limited to institutional investors are opened up to retail investors, we have seen a similar democratisation in trading and trading products.”
Depending on the investment profiles of the retail base per country, Laroia sees good potential in Malaysia to get a full inventory of the entire (approximately) 450 shortable stocks Maybank Securities would not see from its institutional clients.
“This supports the offering further by bringing complimentary liquidity and names into the lending market, often different from what’s available via the institutional lenders,” Laroia explains. “The process of building the full list of inventory across the region will give surety to potential users that there is enough liquidity across the lendable instruments and markets.”
Global investors
Furthering the conversation, McCardle discusses how structural changes to Asia markets can help to drive transparency and liquidity for global investors, and encourage more offshore participation. He pinpoints market’s ranking within indices, such as MSCI, as a key variable to how offshore participation can create change in a region.
He provides Korea as an example, noting it has been pushing for a change, but that the lack of securities borrowing and lending must be seen as a contributing factor for the lack of actual market change in the past few years.
“Why does this bring a significant change for offshore? Simply, many large global beneficial owners track such indices, and so, more favourable status or an inclusion in such indices mean these funds are more likely to purchase those stocks,” says McCardle.
For more offshore participation, he believes it is important to realise that participants are focused more on emerging and developing markets, rather than developed markets.
“Japan, Australia, Hong Kong, and Singapore are developed and enjoy significant participation. Korea, Taiwan, Thailand, and Malaysia are on the rise, and with markets such as Indonesia and the Philippines looking to make some regulatory changes in the coming years, it should lead to more interest from offshore participants.” McCardle adds: “What remains to be seen is the pace of change and market structures to drive this.”
Political landscape
Through this indepth discussion, it is imperative to take into account the political landscape, which has seen a number of impactful changes in the last 12 months.
From a Southeast Asia perspective, Laroia believes much of the dynamics of the region will depend on events in the US, and how this will affect tariffs, exchange rates, as well as import and exports.
“Meanwhile, local initiatives like the Johor-Singapore Special Economic Zone (JS-SEZ) have generated lots of interest to attract more investments globally into the region, so it should be an interesting year as it unfolds,” he adds.
JS-SEZ was formed via a signed agreement on 7 January 2025 between the governments of Malaysia and Singapore to strengthen business ties and increase connectivity between the two countries. It will offer special tax arrangements, passport-free clearance, training incentives, and joint events promotions to improve cross-border business for Malaysians and Singaporeans.
Laroia continues: “As ever, we continue to advocate for positive change where we can, and build up the full spectrum of products to provide better investment and return options for our clients”
The political landscape in Northeast Asia, particularly in South Korea, is currently characterised by fluctuations that are likely to impact market participants significantly. Recently, President Yoon Suk Yeol's brief declaration of martial law triggered political turmoil and raised concerns regarding market stability.
Chessum comments: “Despite the rapid reversal of this declaration, the ongoing political uncertainty has pressured the KOSPI index and diminished investor confidence. However, this environment has not dissuaded the Financial Services Commission (FSC) from moving forward with plans to recommence short selling activity, backed by a new and improved monitoring system.”
Overall, while the political climate presents certain risks, Chessum believes it also opens avenues for strategic investment and engagement in the securities lending market across Northeast Asia.
Through Chessum’s rundown of the current landscape in Northeast Asia, he pinpoints that the changing political landscape in the US, coupled with ongoing discussions surrounding trade tariffs, is “likely to generate a wealth of opportunity for securities lenders”.
He says this environment will allow investors to identify potential winners and losers based on policy shifts, while ongoing geopolitical tensions will further provide avenues for investors to strategically position their portfolios in response to evolving economic conditions.
Chessum concludes: “Market participants are navigating a landscape marked by a stringent regulatory environment and a pronounced focus on the cost benefit of short selling and strong levels of investor protection. These factors contribute to increased operational complexities that stakeholders must adeptly manage. Despite these challenges, the opportunities available across the region continue to be compelling.”
The industry is on the lookout for promising emerging markets which could prove beneficial for participants. While the Middle East has gained much attention over the past 12 months, the potential for Latin America has peaked interest, and the removal of stamp duty on securities lending transactions looks to provide further opportunity in Greece.
When it comes to Asia, market participants have noted a common attentiveness in Indonesia and the Philippines, as they look to drive further liquidity in these markets.
Speaking to Securities Finance Times, Maybank Securities CEO Aditya Laroia notes: “In Asia, we would like to focus on large emerging economies, notably Indonesia and the Philippines, where onshore lending obstacles tend to exist, to allow international borrowing of assets. In the meantime, we will work on potential intermediation and alternatives.”
Another interested party is the stock exchange of Hong Kong, HKEX, which has been actively expanding its international presence through strategic partnerships and overseas offices. To grow its market network, the exchange has confirmed a cooperation agreement with the Indonesia Stock Exchange.
Notably, another market which is drawing much attention given recent developments is South Korea. Andrew McCardle, head of EquiLend Asia, says the big focus and question for 2025 is Korea. He asks: “Will the go-live date of 1 April for lifting the short selling ban be a day of significant activity? Or will it be a cautious move back into a market that back in 2019 was the second-biggest market in the region, with its sights firmly set on the number one spot?”
In APAC, the start of 2024 was uncertain due to the South Korean short selling ban introduced in the previous November, which “continued to loom over the securities lending market”, states Matthew Chessum, director of securities finance at S&P Global Market Intelligence. He confirms that the ban followed a period of record revenues for the country and region, casting uncertainty on future performance.
In March 2025, South Korea will lift the short selling ban. Chessum explains that the scheduled reopening of South Korea is likely to provide additional opportunities for lenders and borrowers. “Heading into the short selling ban during 2023, revenues in South Korea were hitting new highs. The South Korean economy has a strong focus on technology and innovation and is likely to provide lenders and borrowers a renewed source of revenues.”
McCardle interjects: “Demand will be high, but with the regulatory hurdles and added cost of tech and personnel, the outstanding question will be: will this be a market that many firms go back into in scale early in the year? Only time will tell, but I believe that we will not see too much activity until the second half of the year.”
Taiwan and Malaysia
Reviewing the APAC landscape over the past 12 months, arguably the two standout markets have been Taiwan and Malaysia.
In a year marked by a two per cent decline in market revenues and average fees across Asia, lending in the region's equities demonstrated remarkable resilience given the challenges it faced, according to S&P Global Market Intelligence data. In addition, Taiwan and Malaysia have showcased “impressive growth” in revenues, average fees, and balances.
“The experiences of both Malaysia and Taiwan illustrated the increasing accessibility investors enjoyed in terms of securities lending across the region,” reports Chessum.
“Once viewed as complex markets due to pre-sale notification requirements and stringent penalties for trade settlement failures, the growth in demand and revenues in these markets underscored that, with the right controls and processes in place, lenders enhanced their ability to navigate these additional transactional complexities.”
Overall, while 2024 presented its share of challenges, Chessum believes the robust performances of Taiwan and Malaysia signalled a “promising outlook for Asian equities”, driven by demand for assets in these relatively new markets and strategic market adaptability “growing the number of new opportunities” for both lenders and borrowers.
S&P Global Market Intelligence names the surge in AI and the corresponding demand for advanced chip and semiconductor capabilities, as a significant catalyst for stock market performance throughout 2024.
Taiwan is a “powerhouse” in the global semiconductor arena, responsible for approximately 60 per cent of the world's semiconductor production. “This dominance, coupled with its expertise in technology and hardware, fostered robust securities lending demand for Taiwanese equities,” adds Chessum.
Consequently, Taiwan emerged as the highest revenue-generating market in the region, according to data from S&P Global Market Intelligence, amassing US$768 million — equivalent to the combined revenues of the seven highest-grossing European countries.
Similarly, Malaysian equities experienced “a remarkable surge” in demand throughout 2024, with revenues “skyrocketing” by 73 per cent year-over-year (YoY). Average fees in this market also saw a healthy increase of seven per cent, Chessum reports.
Malaysian equities catered to a broader spectrum of investor needs, with capital goods, semiconductor, and utility companies all contributing to strong revenue figures. Sunway Bhd took the lead as the highest revenue-generating stock in Malaysia, reporting annual revenues of US$2.3 million.
Chessum concludes: “As investors look to navigate these changes, the markets of Taiwan and Malaysia are emerging as attractive opportunities for lenders. The size and growth potential of these markets can provide additional revenue avenues, further enriching the securities lending landscape in the APAC region.
“As these dynamics unfold, 2025 promises to be a year of robust activity and opportunity for participants in the securities lending market across the APAC region.”
China
China is set to remain crucial in 2025, boosting Asia’s economic and innovative status, according to HKEX. Speaking with Securities Finance Times, an exchange representative notes that global investors are underinvested in China, which could present an opportunity for asset managers to increase allocations in the world's second-largest economy.
China's economy is undergoing structural changes with expanding capital markets and diversified portfolios. Emerging sectors include new energy, environmental protection, electronic vehicles, AI, biotech, advanced hardware, and semiconductor materials.
“Moreover, China's ambitious decarbonisation plans present massive opportunities. The country's focus on green technology and sustainability initiatives is expected to create new investment opportunities and drive long-term growth,” says HKEX.
As a key international financial centre in Asia, Hong Kong is positioned to offer two-way connectivity between mainland China and the rest of the world, attracting international issuers and providing an “efficient market infrastructure and a robust regulatory framework”.
With the Connect programme linking mainland China’s onshore market and Hong Kong’s internationally-facing market, HKEX says Hong Kong is “the market to be in” to facilitate these cross-border flows with globally-recognised market rules and standards.
HKEX has been expanding its Connect programme with new products — such as the additions of bonds, ETFs, and interest rate swaps — and new market infrastructure, including additional trading days and Master SPSA services.
To support the continued development of Hong Kong as a financial centre and encouraging more participation from offshore investors, HKEX highlights its work to enhance market infrastructure to drive liquidity in the securities markets, through the introduction of the Hong Kong dollar/renminbi Dual Counter Trading Model, implementation of severe weather trading, as well as reducing the minimum spreads for certain securities.
Commenting on the year ahead, Chessum says: “With the possibility of further stimulus measures in mainland China, there is potential for significant movement in the stock market, creating numerous opportunities for investors looking to capitalise on market fluctuations.”
Digital transformation
The increasing use of AI in the West brings into question the road to digital transformation, and it appears firms are eager to invest in their technology infrastructure to provide for future innovations. As Chessum puts it: “Behind every great product is a robust technical foundation.”
For S&P Global Market Intelligence, the use of AI and machine learning (ML) has led to the improvement of the firm’s ability to identify erroneous or outlier transactions, enabling it to detect abnormal variances in volumes and fees across various asset classes and markets. “This advancement represents a major step forward in our data cleansing and aggregation processes, ensuring that we consistently deliver best-in-class data,” Chessum highlights.
AI is helping to drive activity and interest in markets such as Taiwan due to the firms listed in the country, according to McCardle. With market nuances and multiple language barriers, some questions arise as to how to implement AI in the region.
For EquiLend, the firm is moving its distributed ledger technology (DLT) solution 1Source from beta phase to full go-live with multiple clients in 2025. McCardle explains: “We continue to engage and see keen ongoing interest from clients in Asia as to how this tech can help to bring significant risk mitigation into markets such as Korea and Taiwan in the future.”
While it may be harder to implement in the region, McCardle insists the potential reward from DLT and AI from a risk mitigation perspective could be the largest of all the regions in the world.
The value of AI is also a topic explored across Maybank entities. This technology is beginning to be implemented in research and recommendation processes at Maybank Securities, especially towards its retail clients.
Laroia adds: “But more specifically in the lending space, it remains a key area of interest. Maybank will liaise with our technology providers to see how they are accessing the various fragmented offerings. The expectation would be that the exchanges look to implement where they can, especially if T+1 gets onto the agenda that the collateral agents and custodians generate solutions to reduce settlement and credit risks.”
At HKEX, the exchange has applied AI in assisting to extract and review the information from the announcements and annual reports published by all issuers listed on its markets, therefore enhancing vetting capabilities and compliance work, its spokesperson says.
“The integration of AI in securities lending data provision has led to significant positive impacts for the market, particularly in enhancing short squeeze score calculations and trend analysis,” highlights Chessum. “By leveraging advanced algorithms, AI can process vast amounts of data at unprecedented speeds, allowing for real-time insights that were previously unattainable.”
He indicates that rapid data processing enables market participants to assess short squeeze risks more accurately, identifying potential opportunities and threats with greater precision. In addition, Chessum suggests AI-driven trend analysis helps traders to recognise patterns and shifts in market behaviour, facilitating more informed decision-making.
“Overall, the amalgamation of AI in this domain not only improves efficiency but also empowers participants to navigate the complexities of the securities lending landscape with enhanced confidence,” he insists.
Retail investors
Retail investors are taking an interest in securities lending, using it to gain incremental value via trading platforms. From an Asia perspective, retail investors have played a “significant role”, particularly in South Korea and Japan, according to Karen King, head of data solutions sales for APAC at S&P Global Market Intelligence. She notes that this influence is now expanding to Hong Kong.
“In Japan and the Hong Kong special administrative region, retail investors tend to be more comfortable utilising securities lending to generate incremental value. However, for this market to truly thrive, we need to see further enhancements in trading platforms and workflows that facilitate the efficient use of retail-held stocks,” says King.
Currently, there remains skepticism regarding the stability and efficiency of trading in this area. Nonetheless, King believes the potential for lucrative opportunities is evident, especially with access to more mid and small-cap companies.
In recent developments, Maybank Securities in Singapore went live with retail lending in 2024 and aims to roll this out to clients across permitted ASEAN markets in the next 18 months.
Laroia comments: “It is the natural evolution of the markets where offerings traditionally limited to institutional investors are opened up to retail investors, we have seen a similar democratisation in trading and trading products.”
Depending on the investment profiles of the retail base per country, Laroia sees good potential in Malaysia to get a full inventory of the entire (approximately) 450 shortable stocks Maybank Securities would not see from its institutional clients.
“This supports the offering further by bringing complimentary liquidity and names into the lending market, often different from what’s available via the institutional lenders,” Laroia explains. “The process of building the full list of inventory across the region will give surety to potential users that there is enough liquidity across the lendable instruments and markets.”
Global investors
Furthering the conversation, McCardle discusses how structural changes to Asia markets can help to drive transparency and liquidity for global investors, and encourage more offshore participation. He pinpoints market’s ranking within indices, such as MSCI, as a key variable to how offshore participation can create change in a region.
He provides Korea as an example, noting it has been pushing for a change, but that the lack of securities borrowing and lending must be seen as a contributing factor for the lack of actual market change in the past few years.
“Why does this bring a significant change for offshore? Simply, many large global beneficial owners track such indices, and so, more favourable status or an inclusion in such indices mean these funds are more likely to purchase those stocks,” says McCardle.
For more offshore participation, he believes it is important to realise that participants are focused more on emerging and developing markets, rather than developed markets.
“Japan, Australia, Hong Kong, and Singapore are developed and enjoy significant participation. Korea, Taiwan, Thailand, and Malaysia are on the rise, and with markets such as Indonesia and the Philippines looking to make some regulatory changes in the coming years, it should lead to more interest from offshore participants.” McCardle adds: “What remains to be seen is the pace of change and market structures to drive this.”
Political landscape
Through this indepth discussion, it is imperative to take into account the political landscape, which has seen a number of impactful changes in the last 12 months.
From a Southeast Asia perspective, Laroia believes much of the dynamics of the region will depend on events in the US, and how this will affect tariffs, exchange rates, as well as import and exports.
“Meanwhile, local initiatives like the Johor-Singapore Special Economic Zone (JS-SEZ) have generated lots of interest to attract more investments globally into the region, so it should be an interesting year as it unfolds,” he adds.
JS-SEZ was formed via a signed agreement on 7 January 2025 between the governments of Malaysia and Singapore to strengthen business ties and increase connectivity between the two countries. It will offer special tax arrangements, passport-free clearance, training incentives, and joint events promotions to improve cross-border business for Malaysians and Singaporeans.
Laroia continues: “As ever, we continue to advocate for positive change where we can, and build up the full spectrum of products to provide better investment and return options for our clients”
The political landscape in Northeast Asia, particularly in South Korea, is currently characterised by fluctuations that are likely to impact market participants significantly. Recently, President Yoon Suk Yeol's brief declaration of martial law triggered political turmoil and raised concerns regarding market stability.
Chessum comments: “Despite the rapid reversal of this declaration, the ongoing political uncertainty has pressured the KOSPI index and diminished investor confidence. However, this environment has not dissuaded the Financial Services Commission (FSC) from moving forward with plans to recommence short selling activity, backed by a new and improved monitoring system.”
Overall, while the political climate presents certain risks, Chessum believes it also opens avenues for strategic investment and engagement in the securities lending market across Northeast Asia.
Through Chessum’s rundown of the current landscape in Northeast Asia, he pinpoints that the changing political landscape in the US, coupled with ongoing discussions surrounding trade tariffs, is “likely to generate a wealth of opportunity for securities lenders”.
He says this environment will allow investors to identify potential winners and losers based on policy shifts, while ongoing geopolitical tensions will further provide avenues for investors to strategically position their portfolios in response to evolving economic conditions.
Chessum concludes: “Market participants are navigating a landscape marked by a stringent regulatory environment and a pronounced focus on the cost benefit of short selling and strong levels of investor protection. These factors contribute to increased operational complexities that stakeholders must adeptly manage. Despite these challenges, the opportunities available across the region continue to be compelling.”
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
