Last year, this time, Asian markets were on a serious upswing when the Chinese markets saw a surge, there were record volumes posted and the largest finance companies were hiring, expanding businesses in a hurry. All that has come to a kind of halt. The turnover rates are shrinking, the shrinkage is at almost the pace that was last seen in 2006. Large financial corporations are facing serious pressures and looking to desperately cut down on Asian equities. Some banks have even shut down operations temporarily.
Investors and issuers have been getting desperate after the Chinese shares crashed. Even the Fed has responded by tightening their monetary policies weighed on sentiment, while they have been quite divisive over the stand in some cases. Revenue levels from stocks traded can and may drop from between 30% to 50% over the same time last year. The information was given by anonymous experts from the regions of China and Hong Kong. Derivatives, especially the equity ones are set to drop by up to 50%, Prime Brokerage, on the other hand, is already down by 20% as of now.
The cuts in the industry are all due to the overall slump, and it is expected to get worse as the days go by, said the head of equities from UBS Group in Hong Kong. Second tier players might just completely quit because their market is shrinking to such an extent.
2016 could possibly be the worst year for Asian equities since 2012 when the European credit crisis was at its peak. Compared to a year earlier, the monetary turnover of Asia’s top ten exchanges has declined drastically, up to 69%. According to Bloomberg, this is the biggest slump from a peak ever recorded since the company started recording market data in the year 2006. Headcount for regional equities dropped by 6%, that is 300 of them, gone. In a May 19th report by JP Morgan analysts, they published that a list of banks including UBS, Credit Suisse Group, and Societe Genrale SA are likely to under-perform as far as stocks go.
One of the ways in which Chinese stocks can get a rebound in volumes is the hope that they are included in MSCI’s global indexes. One of the first banks to respond to this news is Barclays. It has said that it will exit the Asian equities operations completely.