Equity trading revenue engine may sputter

摘要

Equity trading provided a big boost to investment banks in the second quarter, but the surge could be short-circuited after China's surprise move to devalue the yuan. Volatility in Asian markets helped elevate equity trading results for banks universally in the second quarter, but this time round analysts fear investors may simply sit on the sidelines until they figure out the effects. Keefe, Bruyette & Woods analysts said they expect volatility in Asia - particularly in China - may weigh on cash volumes through the third quarter, although they said that derivatives revenues should hold up. "We are expecting revenue growth year-on-year as strength in other areas such as derivatives offsets weakness elsewhere," the analysts said. Revenue from equity trading rose 17.6% to US$14.4bn in the second quarter, helping to offset weakness in fixed income trading. Weak year-on-year comparisons should allow most banks to show improvement over the 2014 third quarter, KBW said. That may depend on the response to China. Other analysts say China could potentially make the rest of the year a bloodbath, making the easiest comps tough to beat.