The region is seeing a structural reallocation of credit on the back of evolving regulation and a growing gap between traditional lenders and borrowers.
In the first half of 2020, far-reaching macro-economic and market repercussions in the wake of COVID-19 have had an inevitable dampening effect on global securities lending. A combination of unprecedented market turbulence and short-selling bans resulted in muted borrower appetite and, ultimately, led to slowing revenues.
Fund houses are touting opportunities for Asian institutions to invest in Europe’s private placements market, but admit there needs to be a regulatory driver to raise market liquidity.