Skip to content

Subscribe to Asset Servicing & Fintech Insights

Discover more information in our monthly publication, the AXIS newsletter, including industry trends, product innovation, Fintech and more from our team of experts.

APAC: A New Era Begins

Securities finance experts discuss Asia Pacific's trending topics including the opening of China, a post-COVID recovery, short selling bans and ESG.

As featured in Securities Lending Times

Experts from Deutsche Bank, J.P Morgan, Northern Trust, State Street Global Markets and Standard Chartered share their views on:

1. Short selling bans

Asia Pacific saw the strictest short-selling bans installed in response to heightened market volatility during the second quarter of 2020. S Korea suffered the brunt of the restrictions.

2. Worse YoY revenue decrease for 2020 compared to other regions

Driven by short selling bans, reductions in specials activity and Asia’s lack of top performance in 2020 unlike US/European COVID-theme corporate winners.  Synthetic access to China provided some relief although limited in scope.

3. Regional revenue figures belie significant market-to-market disparities in revenues – Japan vs. Hong Kong

While both markets suffer from suffered from reduced balances, lack of specials, compressed yields, Hong Kong had a healthy pipeline due to timely restructuring of IPO listing rules and benefitted from China’s flows.  Japan’s YoY impact was worse in part due to the a special stock, Takeda Pharmaceutical, which had significant returns in Q4 2018 and Q1 2019.

4. China’s QFII scheme - 2021 and beyond

The only major economy to report growth in 2020, China is making all the right moves - opening up of China’s A-share market and allowing lending and borrowing for foreign investors under the QFII scheme.  These positives are not without challenges – the inability to strike biliterate agreements; China Securities Finance as the central counterparty; adherence to more disclosure requirements; and lastly, costs and complexity of trading.

5. ESG in APAC

As the region plays catch-up and takes a more proactive approach to managing ESG factors in their lending programmes, PASLA’s work is timely as standardization in approach and measurement is key to drive the ESG agenda.

6. APAC trends in 2021

  • Assuming some semblance of new normal returns in 2021, significant focus on resiliency is expected especially around value-chain integrity.
  • Against an expected back drop of increased supply with muted demand, impact on performance, yield expectations, the race among agent lenders to win mandates and other participants' interactions will be profound.
  • The coming of age of Asian investors and the global focus on the region to generate additional alpha are positives developments.
  • ESG-related activities will continue to accelerate driving greater consideration and practical integration in lending programmes.

Download our paper to learn more.

  

Related Content

In the wake of 2020's market disruption and regional bans on short selling, Northern Trust's Mark Snowdon explains why APAC now boasts several promising growth opportunities.

Learn more about our enhanced securities finance solutions for Asia-Pacific investors.

Confidentiality Notice:  This communication is confidential, may be privileged, and is meant only for the intended recipient.  If you are not the intended recipient, please notify the sender as soon as possible.  All materials contained in this presentation, including the description of Northern Trust, its systems, processes and pricing methodology, are proprietary information of Northern Trust. In consideration of acceptance of these materials, the recipient agrees that it will keep all such materials strictly confidential and that it will not, without the prior written consent of Northern Trust, distribute such materials or any part thereof to any person outside the recipient’s organization or to any individual within the recipient’s organization who is not directly involved in reviewing this presentation, unless required to do so by applicable law.  If the recipient is a consultant acting on behalf of a third party client, the recipient may share such materials with its client if it includes a copy of these restrictions with such materials.  In such event, the client agrees to comply with these restrictions in consideration of its accepting such materials.

© 2021 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability as an Illinois corporation under number 0014019. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. This material is directed to professional clients only and is not intended for retail clients. For Asia-Pacific markets, it is directed to expert, institutional, professional and wholesale clients or investors only and should not be relied upon by retail clients or investors. For legal and regulatory information about our offices and legal entities, visit northerntrust.com/disclosures. The following information is provided to comply with local disclosure requirements: The Northern Trust Company, London Branch, Northern Trust Global Investments Limited, Northern Trust Securities LLP and Northern Trust Investor Services Limited, 50 Bank Street, London E14 5NT. Northern Trust Global Services SE, 10 rue du Château d’Eau, L-3364 Leudelange, Grand-Duché de Luxembourg, incorporated with limited liability in Luxembourg at the RCS under number B232281; Northern Trust Global Services SE UK Branch, 50 Bank Street, London E14 5NT; Northern Trust Global Services SE Sweden Bankfilial, Ingmar Bergmans gata 4, 1st Floor, 114 34 Stockholm, Sweden; Northern Trust Global Services SE Netherlands Branch, Viñoly 7th floor, Claude Debussylaan 18 A, 1082 MD Amsterdam; Northern Trust Global Services SE Abu Dhabi Branch, registration Number 000000519 licenced by ADGM under FSRA # 160018; Northern Trust Global Services SE Norway Branch, 3rd Floor, Haakon VII's Gate 6, 0161 Oslo, Norway; Northern Trust Global Services SE, Leudelange, Luxembourg, Zweigniederlassung Basel is a branch of Northern Trust Global Services SE (itself authorised by the ECB and subject to the prudential supervision of the ECB and the CSSF). The Branch has its registered office at Aeschenplatz 6, 4052, Basel, Switzerland, and is authorised and regulated by the Swiss Financial Market Supervisory Authority FINMA. The Northern Trust Company Saudi Arabia, PO Box 7508, Level 20, Kingdom Tower, Al Urubah Road, Olaya District, Riyadh, Kingdom of Saudi Arabia 11214-9597, a Saudi Joint Stock Company – Capital 52 million SAR. Regulated and Authorised by the Capital Market Authority License # 12163-26 CR 1010366439. Northern Trust (Guernsey) Limited (2651)/Northern Trust Fiduciary Services (Guernsey) Limited (29806)/Northern Trust International Fund Administration Services (Guernsey) Limited (15532) Registered Office: Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3DA. Northern Trust International Fund Administration Services (Ireland) Limited (160579) / Northern Trust Fiduciary Services (Ireland) Limited (161386),  Registered Office: Georges Court, 54-62 Townsend Street, Dublin 2, D02 R156, Ireland.