Hong Kong
05 August 2025
After an impressive first half of the year, securities lending activity in Hong Kong rebounded significantly according to recent market data. Carmella Haswell speaks with industry participants on what this performance means for the region
Image: stock.adobe.com/bennymarty
As an international financial centre, Hong Kong is a connector between Mainland China and the rest of the world. Since the year began, news of continued enhancement and the opening of this market to foreign investors has continued.
From the introduction of an offshore renminbi bond repo business by the Hong Kong Monetary Authority (HKMA), to the approval of China government bonds (CGBs) and policy bank bonds as margin collateral through Bond Connect, the market appears in good stead.
Now having surpassed the halfway point of the financial year, market participants reflect back on the country鈥檚 performance in the first half of 2025, where securities lending revenues 鈥渞ebounded significantly鈥�, according to S&P Global Market Intelligence.
Data reveals that securities lending revenues for this period reached approximately 80 per cent of the total revenues generated by Hong Kong-listed equities in the entirety of 2024. Revenues amounted to US$316.7 million for H1 2025, with average fees rising to 1.7 per cent, reflecting a 23 per cent increase year-on-year (YoY).
This activity was underpinned by a strong equity market performance and renewed investor sentiment, says Kelvin Chiu, APAC co-head of agency securities finance trading at J.P. Morgan. He reveals that the stock market delivered an approximate 20 per cent year-to-date gain by the end of June, signalling a notable comeback from 2024. For Chiu, improved market liquidity and growing international investor demand for core Chinese assets were the largest contributors to this momentum.
While most of the activity in Hong Kong stocks in 2024 was concentrated in Chinese property companies, Matthew Chessum, director of securities finance, ETF, and Benchmarking Services at S&P Global Market Intelligence, notes that 2025 saw the highest revenue-generating stocks emerge from various sectors, including consumer staples distribution and retail, software and services, as well as technology and hardware.
Expanding on the equity market, Chessum says the region鈥檚 2024 performance was notably subdued due to heightened market uncertainty. He adds: 鈥淎 reallocation towards Indian investments led to asset outflows from the province, as concerns regarding the Chinese real estate market and broader geopolitical and economic uncertainties continued to impact securities lending activity.鈥�
On average, monthly revenues in H1 2025 have increased by 94 per cent YoY, with March and April witnessing growth rates of 155 per cent and 130 per cent, respectively. S&P Global Market Intelligence data reveals that March marked the highest revenue month of 2025 to date, with average fees climbing to 1.89 per cent and revenues hitting US$63.1 million.
Exploring Hong Kong鈥檚 trending activity, J.P. Morgan鈥檚 Chiu pinpoints how fundraising activity surged during this period, supported by Chinese government policy initiatives and measures introduced by the Hong Kong Stock Exchange (HKEX) to attract listings.
Hong Kong raised US$14 billion through initial public offerings (IPOs) in the first half of the year 鈥� seven times the amount raised during the same period in 2024. Moreover, the region became the top global fundraising hub and achieved the second-highest half-year fundraising total in the past decade, Chiu states.
The funds raised in the first half of this year already surpassed the entire amount raised in 2024, with market analysts projecting up to 100 IPOs this year and total fundraising to exceed US$25.5 billion.
Supporting the key observations regarding H1 2025 performance, Alex Prince, head of stock backed lending and delta-one trading, APAC at UBS, has seen a "significant turnaround鈥� in securities lending activity since Q4 2024, with material growth in gross balances from a variety of trading strategies.
鈥淲hile macroeconomic factors in H2 2025 are difficult to predict, there are signs of a resurgence in fundraising, which will continue to drive hedging demand through the rest of 2025,鈥� Prince continues. 鈥淎s one of the foreign banks with a long history of investment in Greater China, UBS is well-positioned to benefit from the continued interest in the region.鈥�
A continuing investment
鈥淥verall, first-half performance signals a mature and more diversified market, with participants increasingly focused on risk-adjusted returns, real-time data, and counterparty risk management,鈥� notes Darren Crowther, head of Securities 麻豆影视传媒 and Collateral Management at Broadridge.
The H1 2025 performance 鈥渞eaffirmed the robust rebound鈥� Broadridge had anticipated for Hong Kong鈥檚 securities finance market 鈥� a trend the firm has been following through its client engagement.
The positive momentum is reflected in the heightened activity and participation in securities lending programmes among both local and global institutional clients, Crowther says. The firm鈥檚 clients report improved loan utilisation rates and growing appetite for more flexible lending solutions, such as triparty collateral arrangements.
Further, the activity is driving Broadridge鈥檚 continued investment in Asia-focused product innovation and partnership with market participants. Notably, the adoption rate of Broadridge鈥檚 trading electronic platform has accelerated, reflecting increased focus on automation and transparency as institutions look to optimise their lending operations.
So what is causing the rebound in securities lending? For some market participants, the uphill trend in activity is the result of a number of factors.
In particular, State Street鈥檚 Matthew MacArthur, vice president, financing solutions agency lending trading, names corporate activity by issuer companies as a key driver of increased borrow demand in Hong Kong.
He explains: 鈥淐onvertible bond issuance and share placements, at discounted pricing, are now a weekly occurrence, as companies look to leverage on elevated stock price levels and strong investor appetite for capital issuances.
鈥淎 resumption of short selling activity is driving demand in Korea. The regulator restricted short selling in late 2023 and only recently approved the resumption of this activity in March 2025, leading to increased borrower demand for securities.鈥�
From a J.P. Morgan standpoint, the increased securities lending activity being seen can be attributed to the ongoing geopolitical uncertainty that has led to elevated demand for certain securities across various sectors, particularly where supply is tight or volatility has increased.
In his review of the market, Chiu highlights a broadening interest across a wider set of stocks as borrowers look to extend their reach for additional alpha. He explains: 鈥淚n addition, strong equity market conditions have led to a wave of capital raising events, which in turn spur additional hedging and borrowing requirements.鈥�
Chiu believes the sustained equity market uptrend continues to create opportunities for new strategies and portfolio enhancement, adding to the depth and breadth of lending activity.
Other factors to take into consideration include the expansion of cross-border programmes, for example, the continued enhancement of Stock Connect and the addition of new Connect-eligible securities. Crowther indicates that these have strengthened Hong Kong鈥檚 role as a regional and global lending hub, with participation from both local and international players.
The region has also faced progress on tax and beneficial ownership rules, which has provided greater confidence to new and existing lenders. Additionally, Hong Kong has seen more asset owners and funds ramp up their lending activity, recognising the growing importance of revenue generation, liquidity support, and ESG integration.
Crowther states: 鈥淥ur teams are actively working with both the buy and sell side in Hong Kong to integrate advanced lending and collateral management platforms, tailoring our solutions to client-specific workflows and priorities.
鈥淲e鈥檝e noted particular interest among clients in optimising lending around specials, maximising programme efficiency through automation, and ensuring ESG compliance.鈥�
A positive path forward
Whether it be an offshore player or a local firm, participants within the Hong Kong securities lending market are expected to see a positive path forward through the second half of the year as industry experts predict a continuation of this notable uphill trend in activity.
The favourable view on H2 2025 has secured the ongoing investment in the region as firms declare their strategic priorities for the rest of the year. Top of the list for some firms is a continued investment in automation, cross-border lending, scaling ESG-compliance lending practices, collateral flexibility, and inventory optimisation, to name a few.
Commenting on the next half of the year, Crowther says: 鈥淏ased on the robust trajectory set in H1 2025, we see further upside ahead. Seasonal peaks around index rebalancing, continued IPO activity, and ongoing regulatory enhancements are likely to keep both demand and supply elevated.
鈥淲e anticipate full-year on-loan balances in Hong Kong could surpass US$65 billion, with lending revenues on pace for double-digit year-on-year growth by year end.鈥�
Supporting a positive path forward, State Street鈥檚 MacArthur predicts continued global investor interest in APAC markets, particularly in Japan, Korea, and Taiwan, which he believes will lend more support to outperformance in these markets from a securities lending perspective. However, he warns that, in Hong Kong, the pace of continued corporate activity 鈥渨hich has been the primary driver of performance to-date鈥� is uncertain.
Hong Kong remains a key lending market in the region, serving as a vital hub for both lenders and borrowers, notes Chiu. It continues to be one of the most dynamic stock lending markets in APAC and 鈥渓ooks poised to regain its momentum鈥�.
The discussion surrounding Hong Kong鈥檚 performance for the first half of the year has put into question the overall importance of Asian securities lending markets.
For Chiu, this rebound reinforces the strategic importance of Asia鈥檚 securities lending markets within global portfolios. He explains: 鈥淎side from Hong Kong, Taiwan and Japan continue to deliver strong performances year-to-date. Additionally, Korea鈥檚 short sell resumption in Q2 has reintroduced lending activity in what was traditionally one of the most lucrative SBL markets globally.鈥�
Overall, Chiu says APAC remains a sizeable component of client portfolios, and suggests that institutional investors continue to view the region as a 鈥渧ery significant part鈥� of their securities lending programmes.
Similarly, Crowther argues that the 2025 rebound in Hong Kong highlights Asia鈥檚 fast-growing influence within global securities finance. 鈥淎PAC as a region is now solidifying its position as the second-largest driver of global securities lending revenue after North America,鈥� he explores, 鈥渨ith regional revenues expected to approach US$1.6 billion this year according to industry projections 鈥� a significant increase from just three years ago.鈥�
This growth is both broad-based and deep, Crowther notes. Hong Kong, Japan, and Korea remain volume leaders, while China鈥檚 evolving regulatory landscape, India鈥檚 capital market liberalisation, and Southeast Asian expansion are creating new and exciting opportunities.
The rebound underscores the necessity for robust, agile technology platforms that can operate across borders and asset classes, so market participants can fully capitalise on Asia鈥檚 momentum in securities lending.
Concluding, Crowther says: 鈥淔or the securities finance ecosystem, the message is clear 鈥� Asia is no longer simply an emerging opportunity, but a core, systemically important hub.鈥�
From the introduction of an offshore renminbi bond repo business by the Hong Kong Monetary Authority (HKMA), to the approval of China government bonds (CGBs) and policy bank bonds as margin collateral through Bond Connect, the market appears in good stead.
Now having surpassed the halfway point of the financial year, market participants reflect back on the country鈥檚 performance in the first half of 2025, where securities lending revenues 鈥渞ebounded significantly鈥�, according to S&P Global Market Intelligence.
Data reveals that securities lending revenues for this period reached approximately 80 per cent of the total revenues generated by Hong Kong-listed equities in the entirety of 2024. Revenues amounted to US$316.7 million for H1 2025, with average fees rising to 1.7 per cent, reflecting a 23 per cent increase year-on-year (YoY).
This activity was underpinned by a strong equity market performance and renewed investor sentiment, says Kelvin Chiu, APAC co-head of agency securities finance trading at J.P. Morgan. He reveals that the stock market delivered an approximate 20 per cent year-to-date gain by the end of June, signalling a notable comeback from 2024. For Chiu, improved market liquidity and growing international investor demand for core Chinese assets were the largest contributors to this momentum.
While most of the activity in Hong Kong stocks in 2024 was concentrated in Chinese property companies, Matthew Chessum, director of securities finance, ETF, and Benchmarking Services at S&P Global Market Intelligence, notes that 2025 saw the highest revenue-generating stocks emerge from various sectors, including consumer staples distribution and retail, software and services, as well as technology and hardware.
Expanding on the equity market, Chessum says the region鈥檚 2024 performance was notably subdued due to heightened market uncertainty. He adds: 鈥淎 reallocation towards Indian investments led to asset outflows from the province, as concerns regarding the Chinese real estate market and broader geopolitical and economic uncertainties continued to impact securities lending activity.鈥�
On average, monthly revenues in H1 2025 have increased by 94 per cent YoY, with March and April witnessing growth rates of 155 per cent and 130 per cent, respectively. S&P Global Market Intelligence data reveals that March marked the highest revenue month of 2025 to date, with average fees climbing to 1.89 per cent and revenues hitting US$63.1 million.
Exploring Hong Kong鈥檚 trending activity, J.P. Morgan鈥檚 Chiu pinpoints how fundraising activity surged during this period, supported by Chinese government policy initiatives and measures introduced by the Hong Kong Stock Exchange (HKEX) to attract listings.
Hong Kong raised US$14 billion through initial public offerings (IPOs) in the first half of the year 鈥� seven times the amount raised during the same period in 2024. Moreover, the region became the top global fundraising hub and achieved the second-highest half-year fundraising total in the past decade, Chiu states.
The funds raised in the first half of this year already surpassed the entire amount raised in 2024, with market analysts projecting up to 100 IPOs this year and total fundraising to exceed US$25.5 billion.
Supporting the key observations regarding H1 2025 performance, Alex Prince, head of stock backed lending and delta-one trading, APAC at UBS, has seen a "significant turnaround鈥� in securities lending activity since Q4 2024, with material growth in gross balances from a variety of trading strategies.
鈥淲hile macroeconomic factors in H2 2025 are difficult to predict, there are signs of a resurgence in fundraising, which will continue to drive hedging demand through the rest of 2025,鈥� Prince continues. 鈥淎s one of the foreign banks with a long history of investment in Greater China, UBS is well-positioned to benefit from the continued interest in the region.鈥�
A continuing investment
鈥淥verall, first-half performance signals a mature and more diversified market, with participants increasingly focused on risk-adjusted returns, real-time data, and counterparty risk management,鈥� notes Darren Crowther, head of Securities 麻豆影视传媒 and Collateral Management at Broadridge.
The H1 2025 performance 鈥渞eaffirmed the robust rebound鈥� Broadridge had anticipated for Hong Kong鈥檚 securities finance market 鈥� a trend the firm has been following through its client engagement.
The positive momentum is reflected in the heightened activity and participation in securities lending programmes among both local and global institutional clients, Crowther says. The firm鈥檚 clients report improved loan utilisation rates and growing appetite for more flexible lending solutions, such as triparty collateral arrangements.
Further, the activity is driving Broadridge鈥檚 continued investment in Asia-focused product innovation and partnership with market participants. Notably, the adoption rate of Broadridge鈥檚 trading electronic platform has accelerated, reflecting increased focus on automation and transparency as institutions look to optimise their lending operations.
So what is causing the rebound in securities lending? For some market participants, the uphill trend in activity is the result of a number of factors.
In particular, State Street鈥檚 Matthew MacArthur, vice president, financing solutions agency lending trading, names corporate activity by issuer companies as a key driver of increased borrow demand in Hong Kong.
He explains: 鈥淐onvertible bond issuance and share placements, at discounted pricing, are now a weekly occurrence, as companies look to leverage on elevated stock price levels and strong investor appetite for capital issuances.
鈥淎 resumption of short selling activity is driving demand in Korea. The regulator restricted short selling in late 2023 and only recently approved the resumption of this activity in March 2025, leading to increased borrower demand for securities.鈥�
From a J.P. Morgan standpoint, the increased securities lending activity being seen can be attributed to the ongoing geopolitical uncertainty that has led to elevated demand for certain securities across various sectors, particularly where supply is tight or volatility has increased.
In his review of the market, Chiu highlights a broadening interest across a wider set of stocks as borrowers look to extend their reach for additional alpha. He explains: 鈥淚n addition, strong equity market conditions have led to a wave of capital raising events, which in turn spur additional hedging and borrowing requirements.鈥�
Chiu believes the sustained equity market uptrend continues to create opportunities for new strategies and portfolio enhancement, adding to the depth and breadth of lending activity.
Other factors to take into consideration include the expansion of cross-border programmes, for example, the continued enhancement of Stock Connect and the addition of new Connect-eligible securities. Crowther indicates that these have strengthened Hong Kong鈥檚 role as a regional and global lending hub, with participation from both local and international players.
The region has also faced progress on tax and beneficial ownership rules, which has provided greater confidence to new and existing lenders. Additionally, Hong Kong has seen more asset owners and funds ramp up their lending activity, recognising the growing importance of revenue generation, liquidity support, and ESG integration.
Crowther states: 鈥淥ur teams are actively working with both the buy and sell side in Hong Kong to integrate advanced lending and collateral management platforms, tailoring our solutions to client-specific workflows and priorities.
鈥淲e鈥檝e noted particular interest among clients in optimising lending around specials, maximising programme efficiency through automation, and ensuring ESG compliance.鈥�
A positive path forward
Whether it be an offshore player or a local firm, participants within the Hong Kong securities lending market are expected to see a positive path forward through the second half of the year as industry experts predict a continuation of this notable uphill trend in activity.
The favourable view on H2 2025 has secured the ongoing investment in the region as firms declare their strategic priorities for the rest of the year. Top of the list for some firms is a continued investment in automation, cross-border lending, scaling ESG-compliance lending practices, collateral flexibility, and inventory optimisation, to name a few.
Commenting on the next half of the year, Crowther says: 鈥淏ased on the robust trajectory set in H1 2025, we see further upside ahead. Seasonal peaks around index rebalancing, continued IPO activity, and ongoing regulatory enhancements are likely to keep both demand and supply elevated.
鈥淲e anticipate full-year on-loan balances in Hong Kong could surpass US$65 billion, with lending revenues on pace for double-digit year-on-year growth by year end.鈥�
Supporting a positive path forward, State Street鈥檚 MacArthur predicts continued global investor interest in APAC markets, particularly in Japan, Korea, and Taiwan, which he believes will lend more support to outperformance in these markets from a securities lending perspective. However, he warns that, in Hong Kong, the pace of continued corporate activity 鈥渨hich has been the primary driver of performance to-date鈥� is uncertain.
Hong Kong remains a key lending market in the region, serving as a vital hub for both lenders and borrowers, notes Chiu. It continues to be one of the most dynamic stock lending markets in APAC and 鈥渓ooks poised to regain its momentum鈥�.
The discussion surrounding Hong Kong鈥檚 performance for the first half of the year has put into question the overall importance of Asian securities lending markets.
For Chiu, this rebound reinforces the strategic importance of Asia鈥檚 securities lending markets within global portfolios. He explains: 鈥淎side from Hong Kong, Taiwan and Japan continue to deliver strong performances year-to-date. Additionally, Korea鈥檚 short sell resumption in Q2 has reintroduced lending activity in what was traditionally one of the most lucrative SBL markets globally.鈥�
Overall, Chiu says APAC remains a sizeable component of client portfolios, and suggests that institutional investors continue to view the region as a 鈥渧ery significant part鈥� of their securities lending programmes.
Similarly, Crowther argues that the 2025 rebound in Hong Kong highlights Asia鈥檚 fast-growing influence within global securities finance. 鈥淎PAC as a region is now solidifying its position as the second-largest driver of global securities lending revenue after North America,鈥� he explores, 鈥渨ith regional revenues expected to approach US$1.6 billion this year according to industry projections 鈥� a significant increase from just three years ago.鈥�
This growth is both broad-based and deep, Crowther notes. Hong Kong, Japan, and Korea remain volume leaders, while China鈥檚 evolving regulatory landscape, India鈥檚 capital market liberalisation, and Southeast Asian expansion are creating new and exciting opportunities.
The rebound underscores the necessity for robust, agile technology platforms that can operate across borders and asset classes, so market participants can fully capitalise on Asia鈥檚 momentum in securities lending.
Concluding, Crowther says: 鈥淔or the securities finance ecosystem, the message is clear 鈥� Asia is no longer simply an emerging opportunity, but a core, systemically important hub.鈥�
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