International Capital Market Features

Interviewees comment that the use of electronic venues to transact in the secondary market continues to become more entrenched. Historically this has been mainly prompted by efficiencies, with most e-trading in smaller trade sizes and in more liquid, investment grade names. More recently, however, this increasingly has been driven by the need for price discovery and the search for liquidity. Accordingly, in the past twelve months we have seen a growth in the adoption of protocols other than RFQ, including all-to-all and portfolio trading.

Interviewees suggest that liquidity in both the Asia crossborder repo market and the index CDS market held up well during the market moves of 2022. Liquidity in the single-name CDS market, however, continues to wane.

Looking ahead

Interviewees are starting 2023 more optimistic, both with respect to the primary and secondary markets. More stability in the macroeconomic outlook and a sense that the worst is behind us with respect to the Chinese property sector, as well as the opening up of China’s economy post-COVID, are expected to provide a more stable footing for the market in the months ahead, while noting that significant uncertainty remains, not least around geopolitical risks.

Contact: Yanqing Jia, Mushtaq Kapasi and Andy Hill yanqing.jia@icmagroup.org mushtaq.kapasi@icmagroup.org andy.hill@icmagroup.org

Asia international credit on loan – average monthly balances by country/jurisdiction of issue

Source: DataLend (February 2023)