13 September 2017
Reporter: Drew Nicol

Australian superannuations taking ownership of lending strategies, says AIST speakers

The increasing number of Australian superannuations internally managing their investment strategies has coincided with increased levels of lender engagement within securities lending, according to speakers at the Australian Institute of Superannuation Trustees conference.

Higher engagement has boosted returns with increased cash management of collateral, direct/structured loans.

Stewart Cowan, Asia Pacific head of agent lending product and portfolio advisory for J.P. Morgan, and Phil Shepley, head of agency lending trading for Asia Pacific at BNP Paribas Securities Services, told delegates in Southport last week that higher engagement has boosted returns with increased cash management of collateral and direct/structured loans.

Panellists also said they expect this will eventually give rise to indemnified lending similar to that seen in the European and North American markets.

DataLend provided Australian lending data, which revealed that health supplement vendor Blackmores, Westpac, and health care provider Mesoblast were Australia’s hottest stocks.

Revenue generated by these top three names was valued at US $3.95 million, $2.2 million and $1.9 million, respectively.

Overall, the top five revenue earners in the first half of the year accounted for $10.36 million, a significant drop from the $21.65 million generated by Australia’s top five securities during the same period in 2016.

DataLend’s figures showed that the Australian lending market fell foul of the same revenue issue affecting other global markets—a major drop off in equities revenue.

Australian equities revenue fell from $55.1 million in H1 2016, to $45.9 million this year. Common share revenue also dropped $8.9 million over the same period.

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