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What’s Impacting Asset Servicing? 4 Market Trends
What’s Impacting Asset Servicing? 4 Market Trends
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What’s Impacting Asset Servicing? 4 Market Trends

13/01/2020


In 2019, BNP Paribas Securities Services hosted its 2019 Expo called “Delivering the World”. The conference featured a diverse line up of panellists, not least regional leaders of LATAM exchanges such as Bolsa de Valores de Colombia and B3, and BNP Paribas experts in the field. The conference underscored the significant challenges affecting the world’s markets. Here, we share 4 of the key markets predictions that will impact the custody industry. They are positive stories to take us into a new decade.

1) Brazilian savers shift away from cash and bonds

Claudio Jacob, Head of International Business Development & Client Relations, B3, the Brazilian Stock Exchange

“Brazil has witnessed a surge in ‘savers’ who are seeking alternatives to traditionally popular cash accounts that historically paid handsome returns due to the country’s high inflationary environment. With lower interest rates and decreasing inflation, a lot of different new products are coming through and we are seeing momentum shift from big banks to independent brokers and asset managers. This evolution from cash or bonds to other products – such as ETFs - will boost the overall sophistication of the Brazilian markets. ETFs are already becoming a growth area with AUM duplicating from BRL 12 billion in 2018 to BRL 26 billion during 2019. ETFs in Brazil only represent 3% of the volumes traded in the local stock exchanged, compared to 13% in the Bolsa Mexicana de Valores or even 37% in the NYSE and therefore there is much room to grow”

2) Colombia will gear up for renewed investor interest

Rupert James Stebbings, International Account Manager, Bolsa de Valores de Colombia

“Expect renewed investor interest in Colombia, which, despite undergoing significant shifts in its political make up, has had a relatively tranquil economic outlook, featuring lower rates and reduced inflation. In anticipation, regulators have taken steps to streamline the markets, including transitioning to T+2, with the country’s CCP Cámara de Riesgo Central de Contraparte set to oversee equities clearing and settlement. Whereas currently the market can only execute around 100,000 trades per day, the new system will be able to handle upwards of 10 million.”

3) China’s mutual market access schemes will gain in importance

Gary O’Brien, Head of Custody APAC, BNP Paribas Securities Services

“One cannot discuss Asia without talking about access to China. Making use of mutual market access schemes such as China-Hong Kong Stock Connect and Hong Kong Bond Connect will be paramount for companies looking to take advantage of recent regulatory reforms within the region. Such programmes offer investors a straight line to both the Shanghai and Shenzhen equity markets, as well as China's onshore interbank and exchange bond facilities.”

4) India will experience impressive growth

Vivek Harlalka, Head of Sales, India, BNP Paribas Securities Services

“India is expected to deliver a nearly five-fold increase in GDP, as well as assets under management and assets under custody, through to 2030. The country’s demographics tell a good part of the story; expect a near doubling in middle-class representation going forward. As the size of the working population increases and buying power improves, demand is expected to increase sequentially, particularly if the economy continues along its present course. Making it easier to do business will be key to sustaining momentum in the region. According to the World Bank, India is currently ranked 77th in terms of market accessibility; that figure is expected to improve even further by the end of the following decade. A continuation of the current leadership, which has been growth- and reform-oriented, is certainly a good thing for the markets and will help boost access to India.”

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