Deutsche Bank is Asia's largest fixed-income dealer with a market share of 13.8 per cent of institutional trading volume, albeit a position under challenge from Citigroup and HSBC, second and third in market share year and this year's winners of Greenwich Excellence Awards for Service Quality in Asian Fixed Income.
As part of its 2007 Asian Fixed-Income Investors Study, Greenwich Associates asked more than 680 institutional investors to name the dealers they use for their fixed-income trading business, to indicate how much of their total trading business they allocate to each dealer and to rate the quality of service each dealer delivers.
'The three market leaders - Deutsche Bank, Citigroup and HSBC - have amassed their current market shares by building local networks that allow them to serve the needs of most investors across most of the countries in Asia, in both local currency and G3 products,' says Greenwich Associates consultant Tim Sangston.
A decade ago, Asian fixed income was a US dollar-denominated business in which Treasury bonds and other G3 securities made up the bulk of trading volume throughout the region, and Asian companies lacking local alternatives raised money mainly by issuing bonds in dollars.
For the first time since Greenwich Associates began evaluating the Asian fixed-income markets in 1994, bonds denominated in local currencies made up more than half of total fixed-income trading volume in 2006-07 (excluding central banks.)
The rise of these regional markets has had a profound impact on the businesses of the dealers competing for the fixed-income trade flows of Asia's institutional investors. It is no longer possible for firms to reach the top of the Asian fixed-income business by focusing only on a few key geographic centres. The firms with the biggest market shares in the new environment are those with an onshore presence and local capabilities in countries across the entire region.
Citigroup ranks a close second to market leader Deutsche Bank in the competition for Asian trading business with a 13.1 per cent market share, with HSBC not far behind with 11.2 per cent. Standard Chartered achieved a share of 7.1 per cent through its focus on the surging local currency markets.
Citigroup and HSBC are the 2007 winners of Greenwich Associates Excellence Awards in Asian Fixed Income, based on quality ratings assigned to each dealer by Asian institutional clients for sales, trading and research in all types of fixed-income products including G3 and local currency instruments. Last year the awards for sales and trading went to Citigroup, HSBC and ING, while Citigroup claimed the award for research.
'Greenwich Associates recognised UBS, JPMorgan and Lehman Brothers for the momentum they have generated in terms of improved service quality in their Asian fixed-income businesses,' Sangston says. 'We also note the strong quality and significant year-on-year gains made by ING across sales, trading and research while acknowledging that the firm serves a smaller customer base than those of the market leaders.'
In the individual service categories, Greenwich has named ING, UBS and Lehman Brothers as 2007 momentum firms in sales; ING and JPMorgan take momentum honours in research, and JPMorgan in Asian fixed-income trading quality. Greenwich also assesses fixed-income dealers for superior service quality in the hedge fund category, with Morgan Stanley and Credit Suisse both earning high marks.
Greenwich Associates is an international research-based consulting firm in institutional financial services, specialising in providing benchmark information on best practices and market intelligence on overall trends. Based in Greenwich, Connecticut, with offices in London, Toronto and Tokyo, the firm offers more than 100 research-based consulting programmes to more than 250 global financial services clients.