Announcing 2013 Share and Quality Leaders in Asian Fixed Income
Citi, Westpac Banking and Deutsche Bank Lead in Australia/New Zealand
Asia’s fixed-income market is consolidating, even as trading volumes across the region continue to grow. In this rapidly evolving market, HSBC has established itself firmly as the industry leader in across-the-board market share and quality.
Consolidation Amid Growth
Asian institutional fixed-income trading volume increased 15% in 2013. That growth was driven almost entirely by the continued expansion of local currency bond markets, in which trading volumes climbed 60% from 2012 to 2013. Amid this steady growth, the number of fixed-income dealers used by Asian institutions has declined over the past five years. There are two reasons for this drop:
1. Dealer attrition: In the aftermath of the global financial crisis, several global banks pulled back from the Asian region while experiencing severe balance sheet pressures. Some of these banks abandoned Asian fixed income almost entirely; others pulled out of individual products such as rates, other flow business and credit products. The result: There are now fewer dealers servicing Asian fixed-income investors.
2. Resource rationalization: Balance sheet restrictions and reduced resources have forced several banks to cut inventory and offer less in the way of liquidity, experienced sales coverage and research. Some Asian institutions perceiving themselves at risk of losing access to these valued services (and new-issue allocations in credit) have moved to consolidate trading volume in order to make themselves as important as possible to their most important dealers.
Greenwich Share and Quality Leaders
HSBC leads all dealers with a market share of 11.8% in overall Asian fixed-income trading (ex-JANZ). Citi and Deutsche Bank tie for second with market shares of 8.2%, followed by Standard Chartered Bank at 6.9% and Barclays at 5.8%. These firms are the 2013 Greenwich Share Leaders in Asian Fixed Income.
The 2013 Greenwich Quality Leaders in Asian Fixed-Income Trading are Citi and HSBC. HSBC is the 2013 Greenwich Quality Leaders in Asian Fixed-Income Sales, and the 2013 Greenwich Quality Leaders in Asian Fixed-Income Research are Barclays and HSBC.
The two banks that have perhaps the most momentum in Asian fixed-income trading are Bank of America Merrill Lynch and Citi. “Citi is now one of the few banks institutions know can turn to for all products and regions. Alongside HSBC and Deutsche Bank, it is seen as stable and truly committed to the Asian business,” says Greenwich Associates consultant Abhi Shroff. “Bank of America is an up-and-coming dealer that has been winning market share for several years due to a demonstrated commitment to the market that has included some aggressive hiring.”
Local Currency Bonds
HSBC has built a commanding position in the critical area of domestic currency Asian bond trading, with a market share of 13.0%. Deutsche Bank is next at 8.1%, followed by Citi and Standard Chartered Bank, which are statistically tied with market shares of 6.6–7.0%. These firms are the 2013 Greenwich Share Leaders in Domestic Currency Asian Bonds. “Some global banks have decided to sit out the resource-intensive business of trading domestic currency bonds, and most second-tier banks can’t afford the multiple local platforms needed to compete,” says Abhi Shroff. “That has left this booming business to a handful of global banks and the leading local banks.”
Among local banks, ICICI Securities and Axis Bank lead the market in India, ICBC and China Construction Bank in China, ICDB Daewoo Securities, Samsung Securities and Woori Bank in South Korea, and CIMB and Maybank in Malaysia.
Australia and New Zealand
Three dealers are locked atop the fixed-income trading business in Australia and New Zealand: Citi, Westpac Banking and Deutsche Bank. These firms are statistically tied with market shares between approximately 12.0% and 13.5%. They are trailed closely by ANZ Bank at 10.6%, and then at a greater distance by a three-way tie between J.P. Morgan, National Australia Bank and Commonwealth Bank of Australia. These firms are the 2013 Greenwich Share Leaders in Overall Australia/New Zealand Fixed Income.