Regulation is one of the burdens that financial institutions face, especially since more investors are looking to expand their portfolios outside of their own jurisdictions. At the same time, asset managers often struggle to stay on top of all the data that is available to them in the search for insights that will deliver higher alphas and satisfied clients.
IHS Markit has access to more than 2,500 traditional and non-traditional datasets, research and information products across all the major industries, with specialised solutions for the aerospace and defence, automotive, chemical, energy, capital markets, maritime and trade, technology, healthcare and pharmaceuticals sectors.
The company’s team of analysts also constantly explores themes such as value, quality, momentum, short interest, social media sentiment, environmental, social and governance, geolocation, import-export data from bills of lading, ship movements and other data points that can be converted into financial insights to help clients make better-informed decisions.
In the past year, IHS Markit says, several Japanese financial institutions have adopted its Maritime Intelligence Risk Suite (Mirs), a ship characteristics database that features real-time vessel-tracking solutions.
Financiers require the ability to instantly screen both vessels and owners for sanctions violations, and to track live positions and ship-to-ship cargo transfers. Mirs can provide data on the ship, port, terminal and berth information, as well as previous port callings, next destination and estimated arrival times. In doing so, it aids compliance and can help to determine insurance premiums.
One banker involved in ship financing says IHS Markit helps his firm meet its anti-money laundering requirements, as it is crucial that it is able to follow ship movements and monitor ship-to-ship cargo transfers.
Investors are now starting to look more closely at investing in China, just as the country’s regulators open up slightly. Changes to Chinese regulations have prompted global fixed income index providers to include domestic Chinese bonds in their indexes, or at least to consider doing so.
In April, for instance, the Bloomberg Barclays Global Aggregate Index added some Chinese government and policy bank bonds. IHS Markit, too, has also increased the weight of China in its Asia bond indexes in response to the opening of the China Interbank Bond Market.
However, many foreign investors lack the expertise needed to access and analyse data on Chinese issuers, while Chinese asset managers keen to tap foreign investors often lack the tools necessary to attract global capital.
To tackle this, IHS Markit partnered with ChinaBond Pricing Center to launch the iBoxx ChinaBond indexes in October 2018. iBoxx combines IHS’s recognised indexes and methodologies with CBPC’s pricing data. CBPC, a subsidiary of China’s Central Depository & Clearing, has a user base of more than 1,000 market participants, including domestic insurance funds and securities companies, as well as 90% of the country’s domestic banks.
The partnership provides a platform for CBPC to internationalise its data and raise its profile, and an opportunity for foreign investors to analyse and understand the Chinese bond market within IHS Markit’s familiar iBoxx framework.
A Hong Kong unit of a Chinese asset management firm launched two index funds tracking the iBoxx ChinaBond Agricultural Development Bank Investment Grade indexes in May this year. A representative from the firm says its choice was based on the fact that it could depend on the ChinaBond data for the individual bonds included in the indexes. Also, the familiarity that international investors have with iBoxx helps it attract foreign investors who may not have been willing or able to invest in a fund tracking a local index.
Financial institutions also struggle with an ever-changing regulatory environment, as Asian regulators often take a wait-and-see approach when assessing the impact of US and European regulations on banks and other market participants.
They now face regulatory headwinds, however, as they have committed to adopt regulations that replicate standards prescribed by the IFRS, RGP 21 and new initial margin rules.
The region’s fragmented nature also means that many of its credit markets are challenged by a lack of liquidity and transparency. One consequence of thin liquidity is that the data required to value assets and portfolios, as well as analyse trading books and assess the impact of cross-border training on pricing metrics, remains difficult to obtain.
A senior executive at one bank says IHS Markit helps with the “headache” of conducting valuations in Asia: “By expanding the universe of what we can actually do, they make it possible for us to act on our insights and generate returns instead of having to only deal in generic strategies in large markets.”
Judges noted that IHS Markit has significant coverage of data across asset classes including cell phones, vehicles and maritime. One judge said: “IHS has a clear understanding of transparency and usability for clients. It has a good focus on data for regulatory requirements.”