APAC 2024 Performance
January 29, 2025
While global securities lending revenue faced headwinds in 2024, the Asia-Pacific (APAC) region showed resilience, experiencing a comparatively modest 1.8% year-over-year (YoY) decline to $2.1 billion. The majority of revenue was generated by equities, contributing $2 billion, representing a 0.3% YoY decline. A 3.3% increase in fees was offset by a 3.8% decrease in on-loan balances. The Information Technology (IT) sector was the primary driver of growth in the region, fuelled by the surging demand for AI-related applications and semiconductor manufacturing. Lending activity within the IT sector produced $661 million in revenue. While the APAC region was relatively flat as a whole, regional market performance can be categorized into three groups: the good, represented by Taiwan’s stellar performance; the bad, marked by Korea’s short-selling ban and Hong Kong’s underwhelming results; and the steady, exemplified by Japan’s consistent and reliable returns.
The Good: Taiwan’s Stellar Performance
Taiwan stood out among APAC markets in 2024, bucking regional trends to earn its position as the top securities lending market in the region. Revenue from Taiwanese equities reached $726 million, representing YoY growth of 41%, fuelled by a 32.5% increase in on-loan balances and a 6.2% rise in fees.
Taiwan’s strong growth has become a focal point for securities lending market participants due to factors including its ranking as a top semiconductor manufacturing hub, as concerns swell over an AI-driven bubble, combined with fears of yet another trade war and rising tensions across the Taiwan Strait.
The top two highest-revenue-generating securities in APAC for 2024 both originated from Taiwan, and both within the IT industry. Leading the way in Taiwanese equity lending was Giga-Byte Technology Co (2376 TT), generating $24.22 million in 2024, up 110% YoY. Vanguard International Semiconductors (5347 TT) followed as a close second, having generated $24.2 million, a 369% increase, for lenders.
The Bad: Hong Kong and Korean Performance
Within the backdrop of China’s prolonged real estate crisis, Hong Kong experienced a YoY decline of 3.5% in 2024, with lending activity earning $342 million. Although fees increased by a modest 6.2% compared to 2023, on-loan balances were down 9.4% YoY, while on-loan quantities remained flat throughout 2024. Arguably, the real estate securities driving revenue for Hong Kong in 2023 have been exhausted. Despite a flurry of activity following China’s stimulus announcement in October, the fiscal measures did little to boost investor sentiment, with broader geopolitical and economic uncertainty continuing. An exception would be East Buy Holdings (1797 HK), which was the third highest earning security in APAC in 2024, earning $23.7 million, primarily driven by a 72% increase in fees over the course of 2024.
With the introduction of the short-selling ban in November 2023 and subsequent extension until Q1 2025, it is unsurprising that the Korean market experienced a sharp decline in securities lending revenue. Lending activity generated $75 million in revenue in 2024, down 77%, with fees and on-loan balances down 45% and 59% YoY, respectively. As we look toward the planned lifting of restrictions at the end of Q1 2025, some market participants may be cautious to re-enter from a regulatory risk perspective. However, looking back to the second half of 2021 when COVID-induced short selling restriction were lifted, we saw a 161% increase in revenue. With all exchange securities being eligible for shorting post-restrictions, we may potentially see a similar resurgence in Korean activity this year.
The Steady: Japan’s Consistent Performance
While dropping one place to being the second-best performing securities lending market in the region, Japan’s performance has remained steady from an earning perspective. Japan generated $650 million in lending revenue in 2024, up 4.9% YoY. The increase was driven by a 13% rise in fees offset by a 7.5% decrease in loan balances. With the Bank of Japan raising interest rates at the beginning of the year, Japanese fixed income revenue was down 9.9% compared to 2023, generating $23 million amidst a 13% decrease in fees. This fits the broader APAC fixed income trends, where revenue from lending activity generated $116 million, down 23% YoY.
Despite a subdued global securities lending market in 2024, with declining revenue across all 3 major regions, Taiwan emerged as a standout within APAC. Strong activity in the Information Technology and Semiconductor sectors drove its performance, supported by growing demand for AI-related applications and semiconductor production. These factors helped solidify Taiwan as the best performing market in APAC for 2024. As we look to 2025, geopolitical and macroeconomic concerns persist, the AI wave remains strong, and Taiwan will no doubt continue to play a pivotal role in the region’s securities lending landscape.