As the world turned to Hong Kong to take of view on a slowing China, 2015 proved to be a banner year for Asia’s securities lending market.
Revenues from securities lending activity in Asia were up 21% yoy to a record $672m
Hong Kong and South Korea were the region’s strongest markets in terms of revenue increase
Shares trading special represent over 80% of the region’s stock lending revenues
Last year’s volatile Chinese markets offered ample opportunities for Asian short sellers to short shares directly exposed to the country’s economic headwinds as well as shares that came under pressure from the country’s slowing demand for commodities. Stock borrowing activity in the region surged to multi-year highs with every major market seeing an increase in demand.
The total revenue generated last year by the Asian securities lending industry reflects these dynamics as revenue surged. The industry generated $672m from lending out stocks in 2015 marking a 20% increase above the previous year’s tally. This marks the best year on record beating 2012’s record of $643m.
This bumper number was driven mainly by an increase in the value on loan. The average daily value of shares on loan on any given day, at $115bn, represented a 15% increase on the previous year. This signified the largest average daily balance since 2008 when $130bn shares were out on loan on any given day.
The full article including graphs is available here: http://www.markit.com/Commentary/Get/27012016-Equities-2015-vintage-year-for-Asian-securities-lending