Asian Markets May Return To The Spotlight
The emerging derivatives markets, particularly Southeast Asia and India, are expected to attract greater international interest because of further capital markets rule relaxation.
The emerging derivatives markets, particularly Southeast Asia and India, are expected to attract greater international interest because of further capital markets rule relaxation. "Interest in emerging markets is returning to the forefront," said Samuel Koh, head of Asian domestic derivatives trading at HSBC in Hong Kong. He noted that because international investors are seeking higher returns many are revisiting emerging Asian markets. Further opening the doors will also bring in more trading. "Governments in the region, including Malaysia and Indonesia have a more open attitude for further opening their financial markets. There's a good chance a lot will happen in 2005," said Philip Tsao, managing director and joint head of the Asian debt capital markets group at UBS in Hong Kong.
Market officials anticipate Malaysia will look to revalue its currency and make further inroads into the development of its domestic derivatives market. Indonesia is also on the map. "With the 2004 [domestic] elections out of the way, we would expect the Indonesian authorities to resume the development and liberalization of the local markets," said Bryan Yap, managing director and Asian head of global emerging markets at Deutsche Bank in Singapore. In the Philippines, new derivatives licenses are expected after the onset of the year. These will bring in dozens of domestic banks (DW, 11/12). Market officials also expect an interest rate options market to start in India, a country which has seen dramatic growth in derivatives in the last few years.
"Derivatives are shown to be a critical component of these markets, bringing greater efficiency to markets which do not enjoy the same liquidity as Europe or North America," said ABN AMRO's McWilliam. He continued, "I wouldn't exactly call these emerging markets. The local derivatives markets are already here."