Market Matters | Data Assets & Alpha Group: APAC Equity Market Structure & the Liquidity Landscape
Apr 2, 2024
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Clare Witts and Eloise Goulder discuss the dynamics of APAC equity markets, focusing on the rise in turnover ratios, dominance of retail investors, and key market structure themes for 2024. They explore factors behind the growth in trading volumes in countries like Japan, India, Korea, and Taiwan, as well as the impact of systematic trading and retail trader participation. The discussion also covers retail trading trends, market structure changes, and complexities in the APAC market.
APAC markets show increased turnover due to international investor interest fueled by stock connect.
Rise in APAC retail trader activity and systematic trading contributes to market turnover growth.
Deep dives
Factors Driving Increased Turnover in APAC Markets
Asia-Pacific (APAC) markets have seen a significant rise in turnover ratios due to various factors. The introduction of stock connect, facilitating cross-border trading between China and Hong Kong, has fueled international investor interest, notably with Northbound Connect trading exceeding $21 billion daily. Markets like Japan, India, Korea, and Taiwan have experienced notable trading volume growth driven by factors such as positive performance in AI and semiconductors, culminating in enhanced activity.
Impact of Retail and Systematic Trading on Turnover in APAC Markets
The surge in turnover in APAC markets can be attributed to growth in systematic trading and high retail trader activity. Improved trading infrastructure, market regulations, and clearer guidance from regulators have supported systematic trading growth, leading to increased trading volumes. Retail traders, particularly prevalent in Korea and other APAC countries, significantly contribute to turnover, with over 60% share in trading activities.
Market Structure Changes and Fundamental Investment Appetite in APAC Countries
The dynamics of turnover in APAC countries like India reflect a blend of market structure modifications and fundamental investment trends. Technological advancements, such as instant account approvals and linkage to bank accounts, have fueled a surge in retail investor participation. Strong equity performance and enhanced confidence in market growth have further bolstered retail trading activities, indicating a shift towards direct equity investing among previously uninvolved individuals.
In this episode, the group discusses dynamics in APAC equity market structure, including the rise in APAC turnover ratios in recent years (in contrast to the decline in European turnover ratios), the dominance of the APAC retail investor, and key market structure themes to watch through 2024. Clare Witts, Head of Market Structure for APAC, is in discussion with Eloise Goulder, Head of the Global Data Assets & Alpha Group.
This episode was recorded on March 25, 2024.
The views expressed in this podcast may not necessarily reflect the views of J.P. Morgan Chase & Co and its affiliates (together “J.P. Morgan”), they are not the product of J.P. Morgan’s Research Department and do not constitute a recommendation, advice, or an offer or a solicitation to buy or sell any security or financial instrument. This podcast is intended for institutional and professional investors only and is not intended for retail investor use, it is provided for information purposes only. Referenced products and services in this podcast may not be suitable for you and may not be available in all jurisdictions. J.P. Morgan may make markets and trade as principal in securities and other asset classes and financial products that may have been discussed. For additional disclaimers and regulatory disclosures, please visit: www.jpmorgan.com/disclosures/salesandtradingdisclaimer. For the avoidance of doubt, opinions expressed by any external speakers are the personal views of those speakers and do not represent the views of J.P. Morgan.
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